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ttfje IRd^nl JBconomte Society 





•MACMILI^AN AND 00^ Limitb® 




©atron— HIS majesty the king. 

’ • * ♦ 

i Counpit: 

NT HALDANE of Cloak, F.B.S., frmdant. 
. fALFOUR, M.R. F.R.S. A 

The Right Hon. CHARLES BOOTH, F.R.S. 

The Right Hon. ‘.JAMES* BRYCE, O.M., F.R.S. 

The Right Hon. LORD COURTNEY op Penwith. 


The Right Hon. VISCOUNT MORLEY ok Bj.aokbukn, 

Vioe^ Presidents. 

^ ^ - O.M., F.R.S. 

Mr. W.^. Aoworth. 

Mr. G. AltMlTAGE- 4 gMITH. 

Professor W, J. Ashley (Member of SdUoriat 

Mr. Ernest Ayes. 

Professor 0. F. Bast able. 

Dr. A. L. Bowley. 

Professor Edwin CANNAN (Member of Editorial 

Professor S. J. Chapman. 

The Von. Archdeacon W. CifNNiNGHAM, 

% F.B A. A 

Majoi LkonaIR Darwin. 

Professor F. Y. Edgeworth, F.B.A. 

{Chairman of Ediioriai Board) 
Sir T. H. Elliott, K.C.B. (/Ton. Secretarji). ‘ 
Mr. A. Wr^’LUX. 

Professor H, S. Foxwell, F.B A. 

. (Hon. Seeretartf). 

Professor E. C. K. GoNJj^l^f 
Mr. Henry Higgs, C.BT 
Mrs. Knowlei^ 

Mr. 0. S. I ofa. * 

Sir J. Macdofell, C.B. 

Mr. Bern\rd Mallet, O.B. 

Professoi .i. S. Nicholson, F.B.A. 

(Member of Editorial BoaM). 

Sir R. H. Inglis Palgravk,# F.R.S. 

The Rev. L. R. iFhelps. 

Profo-ssor A. C. Pigou. 

Ml*. L. L. Price (Uon. Seeretary). 

The Right Hon. Herbert L. Samuel, M.P. 
Sir Felix Schuster, Bart. ^ 

Professor William Smart. 

Mr. H. 13* Lees Smith, M.P. 

Sir H. Llewellyn Smith, K.C.B. 

Mr. Sidney 

Mr. Hartley Withers. 


Mr. .5. M, KEY^NES, £fi dor and Pecreftu'y. 
Mr. E. .T, HICKS, Asst iSecntary, 


Prof. 0. V. Muller, for •Bombay • 

♦ (Elpim.stono College, Boiitbay). 
Mr. A. Duckworth ,, New South Wale<! 

(Australian Mutual Provident bociety, 
Sydney). , 

Prof. E. Philippovich ,, Austria • 

(University of Vienna). 

Prof. E, Mahaim ,, Belgium 

(University of Lu^ge). 1 

Prof. H. Westergaarl „ Denm4RK 

( Uni velfeity of Copenhagen) 
Prof, Charles Gide „ France » 

» (University of Paris). 

Prof. Gustav Cohn „ Germany 

(University of Gottingen). 
Prof. A. ANDRtiADfcs „ Greece 

(Univeraity of Athens). 

Pro LE Babqn D’Aulnis de Bo^ouill 
for Holland (University of Utrecht). 

Prof. Louis LAno ,, Hungary • 
(Uaiversity of Budapest). 
Prof. A. Lori A ,, Italy 

(University of Turin . 
Mr, JiucHi SOYB^A „ Japan 

* (Industrial Bank Si Ju}>an, Tokyo) 

Prof. A. A. Tschupruw ,, Russia 

(Polytochniual Institute, PAersburg). 
Prof. R. A. Lbhfeldt „ South .Africa 

• • (Johannesburg). 

Prof. G. Cassel ,, Bi^bden 

• • (University of Stockholm). 

Prof.E.E.A.SBLiGMAN ,, 4 Jnited States 
(C olumbia University, New York). 

Applications for Fellowship should be addressed to the SECRETARY, 
Royal Economic Society, 9, Adelphi Terrace, Londoi^ W.O. The Annual 
Subscription* is a Guinea (26 J F^ncs^ &.ny Felloe may compound for his 
future yearly payments bv a Life Subscription of Ten Guineas (265 francs). 
There is at present no entrance fee. 

Editorial Communications should be addressed to J. M. Keynes, Esq., 
King’s College, Cambridge. 


VOLUMl xxm 



Ashley, Prdi W. J,, Comparative Economic History and the English Land* 

ldi*d 165 

Bowley, A. L., Th> Census of Production ... 62 

43owley, A. L., Relation between Wholesale and Retail Price.s of Food ... 61 4^ 
Carr- Saunders, A. M., The Feeding and Medical Treatment of "^kihool 

Children . . ' • 856 

Chapman, Prof. S. J., The Utility of Income and Progressive Taxation ... 36 

Chi Zang WAung, The AnciSht Coins and Currency of China ... it... 624 

Cohn,, Prof. G., Germali Experiments in Fisteal Legislation 537 

(^mniion, J,, The Incidence of National Insurance Confributions 367 

Edgeworthf Pi’of. F. Y., Contributions to Theory of Railway Rates. IV. ... 206 

Glat:^, I., .A# Suocessful^Social Reformer, Ernst Abbe 32| 

Johnson, W, The Pure Theory of Utility Curves 485 

Jones, J. H., Dumping and the Tinplate Industry « 182 

Keeling, F., The Casual Labotu' Problem 1 

^Lavington, F., The Social Interest in Speculation 63 

Lehfeldt, Prof. R. A., -^Finance of Railway Itationalisation fei Great Britain 340 

Mclljaith, J. W., Pfioe Variations in New Zealand • 348 

Pigou, Prc^. A. 0., The Interdep^dence of different sources of Demand and 

Supply 26 

Stamp, J. C,, Incicfencc of Increment Duties 194 

Tillyard, F., English Town Development 647 


Ashley, Annie, Sgcial Policy vf Bimarch By H.* W. llaorosty 272 

Babson and May, 0(mm$rcial Paper for Merchants^ By Benjamin White ... 688 

Barbour^ Sir David, The Standard qf Valw, By J. M. Keynes 390 

Beard, C. A., Economic Interpretation of the Constitution qf the United ^tates. 

By W. Pringle 414 

BeeVt M.f Oeechicite des Sozialismm in England, By M. Epstein 276 

Bbhm^Bawerk, E. vonf Pofitive Theorieeftes KapitaUs, By James Boimr ... 241 

Brisco, N. A.^^eonomic3 of Business. By L. R. Dicksee 615 

Cadbury, M.,eExperiment8 in Industrial Organisation, fty Prof. A. 0* Pigou 116 

Chapman, S. J., Political By P. H. Wickstee^ ... 72 

OhapmAU, S. J., Ektnmtary Economics* By Harold Wright 427 




EE VIEWS {coTvtmvsd ) — 


Chattfti-ton, Alfred, Indmtfial Evolution in Bidia, By Sir Jamoe Wilson ... 252 
Clark, J. B., and J, M., Control of Trusts. ,By Prof. D. H. Mac^ogor 485 
Cleveland, F. A., and Powell, P. W., Hailroad Fina/ice, By W. T. 

Stephenson I * ... 601 

Collins, E. A., By G. F. Shove ... ... 486 

Copeland, M. T., The Cotton Manufadmring hidustry of the Unjfm States. 

By H. W. Macrosty 255 

DeliDj E. M. K., The Oeroyan Cotton Industry. By H. W. Maerosty ... 594 

Dibblee, G. B., The Laws of Supply and Demand. By H. D. Henderson . . 75 

Einaudi, Luigi, Intomo al foncetto di Reddiio Imponihile. By Prof. A. C. 

jTigou f. ... •* 260 

illewyck, E. Van, La Banque NaiionaU de Belgique. Bj^ F. Lavingt(|a ... 586 

Encydopoedia if Industrialism. By Prof. D. H. Maegregor ... ... ... 265 

Fanno, Marco, Le Banche c il Mercato Monetario, By 0. Poz^jraad,.. ... 268 

Farnani, H. W., The Economic Utilisation of History. Bf L. L. Price . . 41 ‘2^ 

Fa3% C. R., Co-partnership in Industry. By Ancurin Vi illiains 591 

¥\9\\ot, IvYmy,, Elementary Principl>cs of Econofinios. By H. I) Honder&oii ... 246 

Fle(!k, Anton A., Kanada, Volhfnoirthschaftliche Grundlagen und WelHvhih- 

schaftJkhe Beziehungc^. By H. W. Macrosty .. # 265 

Ford, James, Oo-oprration in Nev' England. By H. W. Wolff 2^1 

I^oster, The English Factorm in India. By C. Grant Robertson ... 402 

Garr, Max,, Ulrtschqftllchen Grundlagen des Modernen Eeittmgswesens. ^By 

Helene Reiiihcrz ... 94 

Gaskoll, T. P,, Protection paves the Path of Pros)Hrityr * By H. 8. Fiirniss 611 
Gibbon, I. G., MedicoX Be nr fit, in Germany and Denrnarh, By N. B. 317 

Gill, Conrad, The Naral Mutinies of . By F. M. Hai Jman ... . 016 

Gloek(*r, T. W., Governmert u Americovc T-ade Unions. By F. B«^’€‘liog 0l4 
Gnj'ot, Yves, La gestion vor C Ltax ci I’f inuvtcipaliT^s. By Donglys 108, A,*, Die inodrrnen LSsch- und LadseinrUhitingfiii, B}' F A. Hi. a* 132 
HaUVy, lillie, Jlisioire du penph au XJ K.‘' s>iclr, i<y H. Fay 277 

Hawtrey, K. 8., drofid and Pod Trade. 'W Prof. A C. Pigo*.: ... ... 580 

Hoi(]horiit A., Ia’a Financt^ Ofhmona. By T»L 127 

Higginson, J. H., Taq;iffs at U'oric. ■*By N. B. i'earlo ... ... ... 429 

Hirst, F. W., The Panics. By 11. Fnrmss ... c... .. ... 609 

Hobson, J. A., 'ioM, Priee^^ and IPages. By J. M. Keynes ... . 393 

Huart, A., L' Organisation du Credit cn France! By W. F. Spalding ... 683 

Ischchanian, 1), , Die ausland,isehcn EUmente iv der ncssuchen Ifalkswirtschaft 

By H. W. Mu^rosty t.. 433 

Jackson, F. Hnth^ and others. Lectures on British Commeiie. By ^ 

VV. J, Ashby . ..." *.112 

Kaufmann, A.. Theorie und Methodender Statistik. By A. L. Bbwley • ... 608 

Keynes, J. M., Indian Currency and Finance. By P^of. H. S. FdxweU 561 
Leaf, Walter, Troy : A Study in Homeric Geography. By <5. P. S§nger 239 
Lenz, Paul, Die Konzen* ration im Seeschifffahrtsgexoerhe. By Douglas Knoop 267 
Lethbridge, Sir Rop<r, Indian Offer of Imperial Preference, By Sir J,‘M. 

Douio* 572 

Levy, H., Grundlagen des vkonomischen Liberalismus. By L. K, flyder 413 

hicimfiniii U.f Die UnternehTnung.formen. B^H. W» Jdacrosty* 109 

lioria, Achlille, Les Bases iconomiques ^ la, Justwe int&rnatiomle. By 

Norman Angell ... ^ .• 100 

McCabe, D, A., Standard Bade in American Trade Unions, By F? Keeling, 614 
Mahaim, E. , Lc Droit T Mernational Ouvt ier. By S. Sanger 422 



REVIEWS (coniinuecl)-- 


Manes, A., Das yersicherungswgsen. By A. F. Jack 606’ 

Marriott, I. A. R., Fremh Bfftibl'iition of 1848 in Us Economic Aspect. By 

C. R. Fay ^ ... 406 

Martin, E., JTistoire finandkre de VAngleterre, Ijy L, L. Price *409 

Mataja, Vic|oi, La H^laTne. By G. B. Dibbfee .* 115 

Moulton, H. (f., Waterways versus Railways. By W. M. Acworth ’ 89 

O’Connor, 0., and others, San Francisco Rel^f Surrey. Ry Helene Reinherz 602 "" 

Ogburn, W. B., Ghild-labor Legislation. By F. Keeling 616 

Passow, R., Die gemischt privaten und dffentlickin Untetnehmungen. By 

Douglas Knoop ’ . * 

Pataud, E., and Pouget, E., Syndicalism, znd the Co-operative Cornmonwealth.i * • 

By Robertson 420 

Ponson, T. H., EcovKimics of Everyday Life. By N. B. Dearie 428 

Pierson, N, G., Pfinciples of Economics. Vol. II. By Prof. S. J. Chapman *70 
Pigou, A. 0., Wealth and Welfare. By Prof. F. Y. Edgeworth ... ... 62 

Pot']»t*i*b;j jkeus. J., Die allgemeuts Ndhrpjlv'M als L6sung dn sozialen Fragc. 

By M. Epstein 281 

Preyon, W. D.^ Die Arbeiis- und Packtgenosscnschnften Italiens. By H. W. 

Wolff ... ^ 4 269 

J'rolhero, R. E., English Farming Fast and Present. By C. R. Fay 23^ 

Raynaud, B., Vers le Salaire Minimum. By W. G. Constable ... • ... 416 

Reimer^ C. E., Die Deuischen Riihnen und ihre Angchbngen. By Helene 

Reinhorz 94 

Ripley, W. Z,, Railroads: Rates and RegulatioTUs. By W. M. Acworth ... 379 
Robinson, E, V., ^ilroad Taxation in Mihiusota. By J. C. Stamp ... 431 

Robinson, M. F., The Spirit of Association. By L. L. trice 423 

Rohs, ‘« Weihliehe Dienstboten und DienstbotenkalHng in England. By 

Helene Reinherz ... ... ... J ... 280 

SainaStlar, By S. C. Da.s Gupta ... ... 578 

Schmoller, Gustav, Charakterbildcr. By I?ercy A.shley * 249 

^c]i\ini'pci^r,ii.,Th€oriedA:rwirt8chaftlickcnEntwicklung. By L. B. Naymier 105 
(r., Die Formen des wirtschaftlichen Kampfis. By M. Epstein ... 122 

Scott, W. R., Constitution and Finance of Joint' Stock Companies io 172P. By 

H. Olapham 80 

Sellers, Maud, The York Memorandtmi Rook. By J. H. Claphani ... ... 278 

Seligraan, E. R. A., Essays in Taxedion.* By H. D. Henderson ... ... 887 

Shelton, W. A., The Lakes-todhe-Qulf Deep Waterway. By W. M. Acworth 89 
Dv., Kommunaler Fleischversorgung. By C, W. Guillebaud ... 698 

finger, J., Das Land der Monopole. By H. W. Macrosty 596 

Sonibart, W., Krieg tend Oapitalismus. By J. H. Clapham 898 

Sombart, W., Ldxus und Oapitalismus. By J. H. Clapham 398 

Stevens; W. S., Industrial^ CombincUions and Trusts. By Prof. D. H. 

Maegregor * 263 

Streightoff, F. H., Distribution of Incomes in the United States. By A. L. 

Bowley , ••• 425 

Tawnoy, R. H., The Agrarian Problem in the Sixteenth Century. By Prof. 

W. J. Ashley 85 

Thomson, Mary ] 9 ., Epvirtnment otrid Efficiency. By H. W. Macrostj; ... 272 

Vineberg, G., Provincial and Local Taxaldon in Canada. By J. C. Stamp ... 126 

Watney, C., ^and •Little, J. A., InduMrial Warfare, ^y W. G. Constable 124 

WebJb, M. de P., Advance India! By H. M. Ross 576 

Webb, S., and B., Tfu Story of the Kind's Highway. By%ir George Gibb and 

W?M. Acworth 227 

AnSWS (liMMlMMi)- 

, • ' Mi 

SUdnie/, Bdited hf^ SecmuU Trades, Bg Prot* B, Jn Qi$^msn ... 1^9 
Knnt, ForUsunffm 4iher NaltdomVSkmomU, By Bmi A. 0* 7i||^ 

Oh^ld^0% ByH.Hr. 

Hftcroity « I ... ,.. 972 

t, |S.| AdmUsim to Ameru^ Trade Vidons, By ?. Keeliiif Ifiii 


1. G., The Workingeof the Insi^anoe Act ... ••... ... *.. 927* 

Mahfliin, Prof. E., The General Strike iii*Belgium 294 

Mortara, Prof,^., The Economic Revival of Messina ... 488 

Hoore, S. 0., The Trades Board Act at Work ^ 442 

Ogilvie, A. M., A New Histoiy of the Post Oifioe 187 

Plunkett, Sir Horace, American Agricultural Commissiou ... » . 291 

Baper, Prof, 0. L., and Acworth, W. M., Professor Baperia “Railwey^Prans* 

portation*' .. .. ^ 299 

Bees, J. Mbrgan, Wages agd the Cost of Living in South Afriqi* ... ^ .«# 180 

k Stamp, J. 0., The Tax Experiment in Wisconsin ^142 

Stephensop, W, T., Railway and Canal Traffic Act, 19X8 • 2fc 

Stockbroker, A., Depreciation of British Home Investments. 11 '284 

Wood, Prances, Index Numtos for Working Class Cost of living ... - 019 ^ 


Beport of Departmental Committee on matters affecting Oun'ency of the British 
West \frican Colonies ana i^oteohuates. By .1. M. Baynes em 146 

Beport on Ag^cultural Credit and Oo-O{)eration in Genoany. % H. W.^ 

Wolff ... • * 804 

Beport of Departmental C^mitcee on the Night EntploymOnt of Male Young 

Persons in Facto4c8 an^ Workshops. By F. Eeelii^^ 309^ 

Beport of fte Committee of Inquiry into the Conditions ofrfJmploymeut m 
the Linen and other Making-np Trades of the North of Ireland," By 

G. Jebb • • ... 808 

Report on Profit-Sharing and Co-Partnership, By E. Aves ... .. 447 

Beport of the Indvstnal Council. By A. Grasnwood 449 

Report on Conditions of Employment of Van Boys. By A. Greenwood .. 461 

Report of the Chief Inspector Bf lactones and Workshops for the yellSr 1912.^ * 

. By A. Greenwood ... ^ ... * 464 

Report of an Inquiry by the Board of Trade into the Earnings and Honz9 of 
Workpeople in the United Kingdom. VIIL By N.%. Dearie ^ 465 

Report on Oo|t of Living. By M. Epstein ... ..g 632 


Other Official Papem * 148, 869, 459, 685 

NOTKB ON dTBfiENT TOPICS 16M88, 812^1^ 488-487, 889-844 

lUtOXN]' miOCKOjlIiS aW N£W books 184-184, 818-888, 4M-882, 848 


Ao«<ndl W* *„ 8#, #y8. 

JkagliSi, 100. 

X,S5, 112. 

Bolaar> Sfo^m, 2il« ^ ^ 

Baw%, A. L., 421$^ 60^. 
aiMpm$ai, Trof, a X, 70. IW 
OhphBm, X 80, 278, 808 

W. a., 124, 4ia 
Dftd Ouptft, S* 0«, o7a 
]:)68rle, B , lir, 428, 420. 

Dibbl^e. a. a, 110 

Bielcwe, a E., 818. 

DouH^Bur X M., 072 
E^iWi.s JhoL F. Y., 62 
»p$|te||»,A , |22, 127, 276, 281. 
FftftiC a, 277, 406 

Prof. 9L a, P61. 
fnnti^ H S., 600, 611. 

Oibb, Sir Oaorge, 227. 
^IHillbbaiid, 0. W , 608. 
^Hardmaii, F. M.,''616. 
Henderson, H. D., 76, 24R, B87 
Howe, F. A., 482» 

E|||^der, L« E«, 418 
Jaek, AaF., 606. 

^4, 616. 

Kejrnes, J. 890, 808. 

f^noaprp^lmt 107, 108, 287. 

lAvin^tdfdi F., 688. 

BftM^gor, Prof. D. B., 288f«285, 
486. ^ 

HgishMbf, H. W., 100, 266, 206,272, 
4% 604, 506. ^ 

Naymler, X B„ JOO, . * 

Pigott, Prof. A. a, 116, 280.^680i 806. 

a x. X , fOO, 412, 42K.^ 

>, W. H., 414. * * 

Eemherz, Bliss H., 04, OSO, 80a 
Robertson, 0. GraiS, 402. 

Robertson, D. H., 420. 
Ross, H M., 676. 
Eozenraad, 0 , 266. 
Banger, C P., 280. 
Sanger, S , 422. 

Shove, F , 486. 
Spalding, W. F., 688. 
Stamp, J a, 126, 481.* 
Stephenson, W. T., 601. 
White, Benjamin, 688. 
Wicksteed, P. H , 72. 
Williams, Aneunn, 601, 
Wilson, Sir James, 252. 
Wolff. H. W , 269, 271 
Wright, Harold, 427 


Page 6^, lines 4 and 6, transpom “formei and “latter.’ 







Tscb %^'^t^'Hxcba|iges Act was the first important legislative 
etpre|isi^ ^O^ wid^pread and confident belief in this ooontiT 
that , a dee^ier midenM;anding of the problem of unemploymeni 
ha^At last been reacUbd. Many hopes were centred upon the ne\v« 
^ganisatibn. among them was the expectation that 

l^'vrould^prove the means' of grappling with under-employment, 
in the new analysis of the phenomena of unemployment, 
Mhd boon more or less isolated ap a d|ptiact problem. The Labour 
Ex^a^ges soon found themselves dealing with a large number 
of very short engagements of Labour. Some of these belonged 
1^. ocou|tttionS such as dobk labour, in which short engt^ements 
(kte more or lisa inherent in the njiture of the work^ After the 
first year of the operations of the Exchanges, dn attempt was 
mfide to -isolate the statistics of the casual Idbom trades in regard 
to the application^ vacancies and placings, by the institution of 
a special “.casual register,” subdivided into special sections, for 
caoual emidoyees such as tHe Liverpool cotton warehousemen, 
Monehester blotli porters, dock labourers, and sandwichmen. 
Bu^ 1911, the average number of persons on the casual register, 
lO iVham exhplc^ment was given in each*month, was 2,030, and 
thf. number of ;basoal vacancies filled in the year was 126,304. 
Tfa e^^ espondiyg fipirea for 1912 are 3,799 and 266,622. 

Alp^ ^portion of casual labour is not, however, massed 
ill the, SpecificalSy casual labour trades, but is scattered on the 
As it we^ of almost every occupation skilled and Unskilled;', 
bbismbseei fr^uently ^take on extra hands for a diort 
per^ in carder to csope with a mass of work. Such businesses as^ 
others either from the naturg of the Work or Oh; 
dl^untrdif the. relatively high standing costs of machinery, in the 
' 1 ^ 0 . 88.-“Voi., xxm. ‘ .» 




habit of filling up immediately the place of any worker, who is 
away temporarily owing to sickness or for any other cause. 
Thus a spepial class of* “spare mefi*' tends to arise, for example, 
around gas works, street cleansing de^rtments, and tramways in 
all large towns. In Lanfeashire the “sick weaver “ is a recognised 
institution,^ and the Lancashire Labour Exchanges open at 
5.45 a.m. on purpose to immediately the places of textile 
operatives who are absent when the factory opens.^ Finally, 
there’ is inevitably a* considerable proportion of engagements of 
labour which terminate after a very short period owing to the 
faihire of the workman and employer to suit*i5ne another. Every 
Labour Ey change manager know^s the type of workman, often 
peripatetic, who “can’t keep a job,” owing to some defect of 
character or (perhaps not infrequently) some st eak of divine but, 
as things are, unfortunately placed, genius. And every local 
trade unionist (and, it is to be hoped, every Labour Exchange ^ 
manager) knows the firm where the works uij^iager or 'foreman 
has a rough tongue* or an instinclive dislike of standard rules, 
and w^here consequently “men will not stick it,” and a consiTter- 
able proportion of the \vork gets done only with the aid of new- 
comers ignorant of the firm’s reputatiorj. 

All these various causes prodia-e the phenomenon of casual 
employment in primarily regular ocicupations.* Since 191 J the 
Board of Trade have recorded the number of bituaAioujS fur adults 
amongstf those filled (included on th.^ ordinary rcgiste^. vhich 
are known to have been of less than one vvecsk’s durai ion. The 
number was 86,04H in 1913, and ia 3912, being ]8’2 

and 24*0 per cent, re^fipectiv^elj' of aii va-'^uicieo for adults filled^in 
those years. Thfese figures do jiot iinply tiiat tbe Exchanges are 

tending, or might tend, to encourage casual engagemtnts of « 


^ See, e.g,f the report of e, case before the Colne Countj^* Court with regard to 
the Insurance ContnbubioDS of ‘*sick weavers. JI6th 
January, and 13th Fohriiary, 1913, 

2 In the Yorkshire woollbn and worsted industries the employers fjre inore 
willing to let a loom stand for a few hours or a di..y or so. Tljis probably explains 
the fact that of the vacancies for adults filled by the Exchanges in 1912, a 
much larger proportion were known to be temporary, iif the pense of being of less 
than a week’s duration, in the cotton industry than in the woollen and worsted 
industries. The exaot figures are as follows : — 

“ Temporary," 




% of “ temporary " 
to all vacancies 





Woollen and worsted . 



labour.^ The increased proportion of tempprary placings in 1912 
is due to the operation of section 99 of the Insurance Act (see 
pp. 4 and^l, below), which lias enabled *th| Exchanges in some* 
places, particularly boutfi Wales, to secure a. control of the 
engagements of labour in the ifuore casual branches of the insured 
trades, a.g., ship repairing. 

It was re<»ognised from the first^hat some special machinery 
would be needed for dealing with large bodies of casual labour. 
Merely to fill casual labour vacancies of this type through an 
ordinaiy Labour Exchange does almost nothing towards imapeff- 
ing the condition ‘of things, ex^iept in So far as it accustoma 
people to the use of the Exchange, and prepares tljp way for a 
more definite organisation and policy iu the future. Special 
glans of organisation are needed for each large local mass of 
casual labo* r, where such exists, and for gathering together 
scattered fragments of casual labour, wherever this is possible. 
Any sugb speci54l plans must deal with two essential points 
(though they may also include other methods of increasing 
regularity of employment). In the first place they must ‘establish 
some method of controlling the influx ol* labour into a casual 
labour market. Secondljr, they must endeavour to increase the 
mobility of labour within the market. The first special scheme 
for dealing with* a mass of casual 'workers was applied to the 
Clolh Porters of Manchester. In the warehouse quarter of that 
city thejp are*some hundreds of men (perhaps four or fiv^ hundred 
in all) who make a living almost entirely by loading a^d unloading 
cotton cloth from “lorries” in the street. Th4y are taken on 
bj; the hour (and after the first hour by^he half-hour). The 
normal wage is seyenpence an hour, but some of the “bleachers’ 
porters,” who have to carry heavier bales, receive ninepence or 
occasionally tenpence. The ntimbej* of different employers appears 
to be considerably larger than the number of men, but many 
of the*former may only require a man once in a few weeks. 
Th6 npmber of those who, on the average, require at least one 
man once ^ week, is not very far in excess of a hundred. The 
demand for the men .is partly caused by the fact that the police 
object to “lorries ” standing in the streets longer than is absolutely 
necessary. Up to May, 1910, the men hung about the streets 
and the public-houses on the chance of a job. Empfoyers or 
their representatives naturally got to know a certain number of 

* Th# contention of •Mr. J. St.G. Heath, in the Economic Aubnal for 
September, 1910, that the German Labour Exchanges,^ through their ordinary 
operations, had |)robeh:)ly encouraged casual engagements, was warmly denied in 
Oerman^f. See Dm' ArheitmnarlUt March, 1911, pp. 456-6, 

B 2 




more or less reliable men, and where these could usually be 
found. It would have been difficult to imagine a more purely 
casual syst^ of ei^ployment. In May, 1910, howj^ver, 56 of 
the employers were persuaded by the L*abour Exchange authorities 
to jcombine in supporting* an attempt to organise ihe labour of the 
men. A special Labour Exchange (with a waiting-room, in- 
cluding a cheap temperancey-estaurant) was opened in the centre 
of the wajci^house distVict. The 56 employers in the scheme 
agreed to send for their men to the exchange whenever they 
tt<Sig^ed them, and to refuse to take men ofl* the street. , A man 
wa^ only registered if he obt^tiued a card^*fromiian, employer 
containing^ statement that he had been pieviously employed 
as a cloth porter. It was the general prac^.tice of employers to 
ask at the Exchange for a particular man, and to take others onl^ 
if that man was not available. From the first the Exchange 
found itself sending the same men frequently two and even three 
times to different jobs during a single day. Th^ number of firms 
^using the Exchange increased steadily. The number of men 
applying for work at least once during each month varies greatly 
owing to a number of 'causes. The largest and smallest number 
was 513 and 228 in 1911, and 455 and ^2 in 1912. The average 
number of men, for whom in eacli month w^ork was found was 
238 in 1910, 240 in 1911, and 264 in 1912. toie total number 
of separate jobs provided in each month averaged 5,)75 in 1911 
and 6,100 in 1912. The numbe»' ot days in each month ah which 
each man worked, for \v]io;n (mployment w^as ^oand at all, 
averaged 12 in* 3910, 10^ in lOil, and 15 in 19i2. It is said 
that, on the average,* over 100 sepavau* employers are now us^ng 
the Exchange in each week. 

Casual labour was discussed in Parliament on several oecasions 
in connection with the Insurance Bill in 1911. Section 99 of the 
Act contains provisions which aim at facilitafting the work of 
the Labour Exchanges in dealing with the problem. “ It lays 
down first that the B6ard of Trade may undertake thrCugli a 
Labour Exchange the duties of employers under th^ Act 
stamping cards, &c.), in respect of persqns in their employ at the 
time when the arrangement was made or subsequently engaged 
by them through a Labour Exchange; and secondly, that in 
respect 6f such workmen different periods of employment of the 
same workmen or of different workmen may pe counted as a 
continuous employment of a single woi^kman, in so far as the 
employer's contrihjitions for Unemployment {but not Health) 
insurance are concerned. Under the Unemploymeht (unjike the 


Health) Insurance Scheme, each separate period of employ- 
m^t within a week (whether by the samp employer or not) has 
to be accompanied by a separate cotftrill^ution. Under the 
original draft of the insurance Bill, the full contribution of 2Jd. 
had to be paid both by the ijL^ployer and by the workman^ in 
respect of each period. But the Act as finally passed provides 
that, if the period of employment do|^s not exceed two days, only 
twopence each shall be paid by the empidyer and workman, and 
if it does not exceed one day onlj a penny shall be psSd by 

The notxeffect of these provisions id practice is to afford, 
three inducements, which a Labour Exchange is enabled to 
offer employers, ip order to induce them, to engage their labour — 
^d especially their casual labour — according to a definite plan. 
In the first p'ace, it can offer to relieve the employer of a certain 
amount of trciible and expense (amounting in the case of the 
larger firms to the cost of one or two clerks) in keeping and 
sta^nping Health Insurance contribution cards and Unemploy- 
ment Insurance books. Secondly, it can enable a group of 
employers to apportion the total cost of insurance contributions 
of both kinds amongst th^uriselves, according to some plan which 
avoids the uncertainty, due to the fact ti t it may be more or 
less 8 matter of chance who happens to be the first employer of 
a casual worker in a week, and therefore has to pay the whole of 
his HeaiLh Insurance contribution. In the third ptece, the 
employer is differed a small direct .financial advantage as far as 
concerns the contributions of men included in ’the Unemploy- 
ment Insurance scheme. The Board of Trade has offered to 
employers of casual labour a fourth inducement to join in 
decasu^lisa^ion schemes, which is perhaps of more far-reaching 
significance than any of the bthcri;. It has undertaken in more 
than one centr^tef pay wages on behalf of the employers, so that a 
casual worker employed by three or four employers during the 
weeli may draw all his wages at one placd. A charge is made by 
the Board «of Tfade (in the form of a percentage, either on the 
employer's insurance* contributions, or on the wages paid on his 
behalf), for the clerical work involved in stamping catds and (if 
this is also included) paying wages. 

The arrangements offered by the Board of Trade in connection 
with the Insuraivje Act were applied to the existing Manchester 
Cloth Porters’ casual labour scheme as soon as the Act came 
into operation. About eighty employers agreed to engage all 
their oioth porters through the special exchange, to share the 




total cost of their Insurance contributions amongst themselves 
(roughly) in proportion to the number of hours of work wbpb 
.they provide^ for eii^er one or several men,^ and hn%lly to pay 
all their wages through the Labour ilxchange. The Board of 
Trade adds 25 per cent, to the amannt charged to each employer 
for*insurance contributions, as a set-off against the work done in 
keeping and stamping cards ^nd paying wages. A short time ago 
it was found that the aVerage amount charged to each employer 
for ea^h man employed during the week was Ivffd. The number 
o?£k^jnployer8 in the scheme has gradually increased to 11&. The 
Jotal amount of wageS paid in each week varies from about 
d6150 to £1§P. During the first week or two the men objected 
to receiving a weekly wage instead of casual payments in return 
for casual work. In order to meet this, employers continue^ 
to “sub” a portion of the money earned for a short time, but 
now the men are paid only on the Friday afternoon at the 
Exchange. The men are not com])elled to leavr their insurance 
contribution cards at*the Exchange. About ten of them w;ho 
work partly for firms outside the scheme carry their cards with 
them. And when (as frequently happens) a firm which is not 
in the combined w^ages scheme sends to the Exchange for a man, 
the man is given his card to take with him to the firm, if he has 
not worked previously during the week. 

The number of men included in the Manchester Clot^h Porters’ 
scheme b. not large; but the org‘‘i>isation is interest ing,«?because 
it shows the lines on which cVv'D i he most casual of labour 
can be treated, \ind may form tin inodel ior man}^ other such 
arrangements. The liverpool Dock-., on the other hand, con- 
stitute one of what may now termed the historic casual labour 
problems of the country, embracing about a hundre4 tirftes as 
many men as are included ainopg thh Manchester Cloth Porters. 
From the time of the first establishment of the Labour Exchanges 
the officials had bc’.en in negotiation with the employers and with 
the men’s representati\^s with the object of working out* a 
suitable scheme. The whole position of affairs *was,* however, 
transformed by the Dock Strike of 1911. Till then the ‘Union 
was more or less confined to the South End. After the strike 
every docker became a member of the Union, and the “Union 
Button ” became a sine qud non of employment. The employers 
decided, moreover, to try the experiment of aceprding complete 
recognition to the men s representatives, and a Dock Labour 

* It is, however, arrati^d that an employer never pays morS thajii Bd. for a man 
however many times he employs him, and no charge of less than Id. is mad«. 


Joint Committee WBS formed to "deal with all questions of employ- 
ment in the port. On this committee, in conjunction with the 
Board of yrade Labour Exdhangei^ Bivisiojiial OflScer, fell the 
duty of working out a bch^me for organising the casual workers. 
The results of its investigatione ^into the* statistics of employment 
at the Liverpool docks were published in the form pf a pamphlet 
by Mr. K. Williams, the Division^ Officer.^ The chief f^cts 
ascertained in this inquiry were as follows. The total number 
of dockers (calculated from the Union records) was 27,200.^ The 
largest jaumber applying for work at any*pne time on the docjjg 
during January, 1&12, was 22,Q00. The total of the lar^est^ 
numbers employed by each firm on any day during that month 
was 28,514. But the largest number employed by all firms 
together in any one day of the month (th(‘. busiest known for 
many years) vas 15.673. To obtain the total effective demand 
for labour on ^hat day there must be added to this figure 3,901, 
representing mei^ employed overtime or on night shift during the 
previous night, and 287, representing the* shortage of men at 
various stands.*’ On every week-day of the month (excluding 
New Year’s Day, on which many of the men are unwilling to 
work), there were actual surpluses of men at various “stands” 
amounting in all to from 2,435 to 4,990. But on every day 
(excluding New *Yoar’s Day and a day on which there were 
sno’wstoniwi) there were also at other “stands” shortages varying 
from 83,^to 7^0. In the case of each of tw'o large firijiB (from 
whom alone^ such particulars were published) the number of 
individual men paid w^ages at the end of each o6 the four weeks 
o^ the month was practically double the largest number employed 
by them on any one day of the same week. 

The plan whicn was finally approved by the Joint Committee 
for the organisation of the tebour of the port proposed that on 
and after July 15th, 1912, no man should be employed who did 
not hold a Board of Trade “tally” or metal disc. In the first 
instarffce, “tallies” were to be issued only to men who obtained 
the signatore of a firm to a statement that they had been 
employed as dockers. Afterwards the issue of tallies, subject to 
the general supervision of the Joint Committee, was to be in 
the hands of six committees of representatives of employers and 
men for the six “Clearing House areas” into which it was 
proposed to divide the port. Thus a definite system of control 
of the influx of la]?ou^ into th^ port was established. It was 
proposed to improve the mobility of labour in the following 

1 Eeviewed in the Economic Jodbnal, Juno, 1912. 


^nanner. The engagement of men was to take place primarily, 
as before, at the eighty or ninety different “stands*’ along the 
.docks. as soo^p as a “ stand ^ had been “called^” the men 

who had not been engaged were to * repair to one of sixteen 
“surplus stands,’’ where *a telephcme box in charge, of a Labour 
Exchange official was established. Any employer or foreman 
unaible to obtain sufficient i|ien could at once telephone to the 
nearest surplus stand 6r come and choose his men in person. 
The rfdrplus stands were to be grouped and connected through 
tte^^six Clearing Houses. These latter were also to serve as 
jcen^res for the payment of wages. Out of 67 employers who 
came into tjjie scheme, 46 agreed to pay all their wages through 
the Board of Trade. The remaining 21 consented to pay their 
wages at the Clearing Houses, but directly through one of their 
own clerks. The charge to employers for work in connection 
with paying wages and stamping cards was the same “as in the 
Manchester scheme, viz., 25 per cent, on insiiran^^e contributions. 

, The scheme has now been in operation for over six months. 
There was some opposition from a section of the men at tine 
comniencement, resuliiiig at Birkenhead in a strike whioh lasted 
some weeks. But the scheme is now generally accepted, since 
the advantages of a control of the influx of labour from the men's 
point of view have • become clear. Three practical difficuitieb 
have arisen in the working of the scheme. In the &rsTi place, 
there is xo doubt that a considerable proportion of •the Alien are 
unwilling to take a full weelvjs work ever if thef (dn get it. 
Consequently, although tlic nua^bcr )i men already registered 
is sufficient to work thf*. port pn its busiest day, Lhere was actuallj^ 
during the end <?f 1912 a considerable sliort^e of labour on 
several occasions. In point of fact, the issue of “tallies” to 
fresh men has gone on fairly extensively since the starting of 
the scheme. The Clearing House Committees, *whioh took over 
the control of this runtter in October, 1912, appear generally to 
have adopted the principle that a “ tally ” should not be relus'ed 
at any rate to any man who liad previously worked as*a. docker, 
though there is considerable feeling against “4;radesmen” coming 
to the docks for a spell of work while they are unable to obtain 
employment at their normal occupation. The total number of 
“tallies” issued up to the end of each month are as follows : — 
July, 19,107; August, 22,942; September, 2^861; October, 
26,152; November, 27,266; Deccknber, 28,*17i; January, 29,648. 
At the end of October it was estimated that about 1,000 of the 
“tallies” issued represented “duplicates,” t.e., were m the hands 




of men who also possessed another “tally/’ and that at least 
1,600 were held by men who were not altogether dependent upon 
the docks for a living. * ^ ^ ♦ 

These figures may be compared with the number of men who 
have worked during each week as shown by the total number 
of men paid wages^ either directly by employers gr through the 
Board of Trade 


No. pi-id 


No. paid 


No. paid 







aOJulv .. 


28 Sept. . 

.. 19,608 • 

7 Dec, .. 


27 „ .. 

16,271 # 

6 Dot. ' 

. 19,266 • 

14 „ .. 


3 Aug. .. 


12 „ . 

.• 20,016 • 

21 .. 


10 „ 


19 . 




17 „ .. 


26 „ . 

. 20.423 

4 Jan. #. 


24 „ .. 


j Nov. . 

. 20,428 

11 „ .. 


31 .. 


9 „ 

. 20,764 

18 „ 


7 Sept. .. 


16 „ 

. 20,213 

26 .. 


H „ 


23 ,, 

. 19,868 

1 Fob. .. 


21 „ .. 

la- 961 

30 „ .. 

. 20,967 

8 „ 


The/swond difficulty which has ap|ieared, since the scheme 
started, has also tended to accentuate* the shortage of mei^ 
which has been experienced from time to time during the busy 
winter Reason. Neither the employers nor the men have really 
made proper use of thg “surplus ''stands.” It is true that a 
considerable nurnber of men have been placed in work through 
th^ir 'Agency, the estimates for each month- being as follows : — 

July (15th~31st) 1,148 

Auguwfti 922 

Septombor % ‘ 940 

October 3,741 

November 4,r}36 

December » 4,820 

January 4,161 

February (1st to 7th) ... 331 

But these figures are not large coinjfered with the total 
number of daily engagements of labour in the? port. Men still 
tend t& wa/k along the docks after the stands are called, if they 
are not engaged. And not few^ for no reason at all other than 
force of habit, will not work for more than one or at most two 
employers, and will stand idle rather than take temporary w^ork 
elsewhere. At a recent Clearing Hons^ Committee meeting it 
was stated that cases of men failing to go to work, to which 
they had been sent from.a “surplus stand,” were not uncommon. 
Employers and foremen, too, sometimes refuse to make use of 
the “surplus stands” from prejudice, or, after telephoning to a 
“surplus stand,” take on men whom they come across by 
accident^ insteaiJ of waiting a few minutes for the men sent from 
the “surplus stands” All this •human “economic friction” is 
exceedingly diffipult to overcome. , 

The joinl; payment of wages also has not proved an easy 


matter to organise on so large a scale. It is true that the number 
of firms who pay through the Board of Trade has increased, so 
‘ that now only about ^ doTien are stahding out and paying through 
their own clferks. But, although the proportion of wages 
“subbed ” has never been so great in Liverpool as in other ports, 
such as Hull ^tud Goole, the men refused to work on Saturdays 
unlees they were paid for th^ir work on the same iday. It was 
* found impossible for the Board of Trade (even with the aid of 
sixty supplementary clerks, who, along with a part of the regular 
st®£, work all Friday , night) to make up wages for the week 
beyond 5 p.m. on Friday. Consequently tfib employers have 
been compelled to give “subs” themselves to the men for work 
done on Saturday, in order to induce them to work at all, and have 
the trouble of conducting two distinct methods of paying wages^ 
side by side. The Board of Trade has not yet the satisfaction 
either of having established the weekly wage system on a firm 
basis, or of securing a complete record of the employ me^nt and 
wages earned by the Aien. ^ 

At the Goole docks a scheme on practically the same lines 
as that at Liverpool was also started when the Insurance Act 
came into operation. The chief formal ^differences are that (as 
is natural in a smaller jiort) tliere are no subordinate committees 
under the Joint Committed' of employers and men, which was 
constituted specially by the Board of Trade, and •that tT:ie 
employersb’ payments towards the cost of the scheme agj?. calcu- 
lated at the rate of a half per ^cent. on wages instetd of 25 per 
cent, on insurance contributions. There are only five employers 
of dock labour in the^port. Wages in Goole are calculated by 
the hour, and thefe is no minimum of a half-d^y's engagement, 
as in rjverpool. “Subbing” has always been general. Bnt it 
has been arranged that “subs” as svell as the balance of the 
weekly wage shall be paid at the Board of Trade offices (of which 
there are two, on opposite sides of the harbour) on the presenta- 
tion of a pay ticket from«the firm. The number of tallies ifisued 
up to the end of each month since the starting of the scheme 
has been as follows : — 

July 1047 September 1263 November 1893 

August 1164 October 1303 December 1467 

The number of men who received wa^es in §ach week and 
the variations in the amount paid is indicated in the following 








(1) • 

A , 




26 July 




24 Oct. ... 





lAug. ... 



42*8 . 

31 „ • ... 

■ 7 Nov. ... 


116 1 


8 „ 







16 „ 




14 „ 








21 „ 





29 „ 

. 6 Sept. ... 



! 45*3 




878 ; 


i 42-2 

6 Dec. ... 


1031 1 


12 „ , ... 

905 1 


' 43-8 

12 „ 




19 „ 

915 1 


‘ 44*9 





26 „ 


91*6 j 

1 44*3 • 

24 „ 

2 Jan, ..f 





3 Got. • - 




1041 1 

10 „ 




968 ! 



17 „ 


101-1 1 

t ! 

. 44*2 

^6 „ ... ; 



, a.— „„ 


Col. (l)=:pay day. Col. (2;= number of men paid. Col. (3) -percentage of 
aj^rage individual wage during each separate week to average individual weekly 
wage during the whole 2G weeks. Col. (4)=- the percentage of the total wages 
“ subbed” during each week. 

In SunderlaxxJ there is a scheme in operation under section 
99 of the Insurance Act, without any arrangements for joint pays,^ 
covering a few hundred dockers. Negotiations in several other 
ports have not yet resulted in the execution of any plans. 
In London the duty of Regularising the labour of the port was 
laid by section 28 of the Port of London Act of 1908 upon the 
Port Authority, which has, how^ever, power to act through other 
bodies, Siich as the Board of Trade Labour Exchanges. The 
Port AuJJiority claims that it has done something to dficasualise 
labour ; but (Hiring the Dock Strike in the summer of 1912 many 
complaints were made in Parliament and elsewhere that prac- 
tjjpally nothing had been done to carry out the instructions con- 
tained in the ^Act. Various circumstances, including the 
geographical arrangement of the docks and wharves, and the 
peculiar circumstances obtaining ^in the relations of the men’s 
organisations to the employers and the Port Authority undoubtedly 
render the execution of any effective and comprehensive scheme 
in •Ltodon exceedingly difficult at thef moment. In Cardiff, 
Swansea, JBarry, and Port Talbot there are schemes in oi>eration 
under section 99 of the Insurance Act for ship repairers,^ 
embracing altogether 33 employers and about 6,000 men. In 
various other places the Board of Trade has made arrangements 
with groups of employers under section 99, and altogether nearly 
130,000 men appear to be covered by such schemes. But 
probably not more .than about 30 per cent, of these are casual 
workers, in the sense of being habitually engageejj^for periods of 

^ Wko are, oi course, unlike the docker, included in the Unemployment Insurance 




less than a week. A considerable number of them are, however, 
engaged in seasonal trades. In Leicester, for example, practically 
. the^^whole the elnployers in tlfe building trades have made 
arrangements under section 99 witn the Labour Exchange 
covering some 2,000 men. In •Liverpool a special Labour 
Exchange has since June, 1910, secured the great bulk of the 
engagements of cotton warehousemen without the aid of a scheme 
under section 99. The number of these men normally varies 
from about 4,000 in the busiest time of the winter to something 
IA/q 1^500 in the slackest time in the summei;. But the work is 
^ot 4 )urely casual fco a f^ery large extent. 

It is interesting to compare these schemes, which have been 
developed entirely with the object of attempting to counteract 
the effects of casual labour, with the organisation which th^ 
employers of dock labour in Hamburg have buill up from purely 
business motives, with the object of securing as efficient a supply 
of labour as possible. In May, 1907, there was »’ strike amongst 
the “shipmen.’*’ The Port Employers’ x\ssociation imported 
altogether 9,022 blacklegs (of whom 5,916 came from England), 
and succeeded in completely breaking the strike with the aid of 
these men. They then determined to ^ace the whole organisa- 
tion of labour in the port on a better basis. The foundation of 
the now system was to be 2,000 “ Kontraktarbeiter enga^d 
by the Association on a monthly contract, I)nt hired- out to 
individual firms, who had to guarantee them at 1eas(^ a 30.s\ 
minimum wage, though, apari^ from this guarantee they were 
to be paid for the time during which they actually worked. 
It was found, however* in practice, to be im]>os&ible to raise th« 
number of “Kontraktarbeiter ” to more than abqjut 1,150, as long 
as individual firms had to guarantee the minimum wage, of all the 
men whom they took. An iijtere.^ing device was therefore 
adopted in 1910 in order to increase the number of “Kontrak- 
tarbeiter.^' A number of the larger steamship lines agreed to 
take an additional numtfer of ‘*Xontraktarbeiter ” on conation 
that they might give notice at midday on any day^ that -the men 
would not be required on the following d^y. These firms under- 
took jointly, through the Employers’ Association, to find the 
men work elsewhere, or guarantee the minimum wage. This 
plan enabled the number of “ Kontraktarbeiter ** to be raised from 
1,165 at the end of 1909 to 1,468 at^the end of ipiO. Twenty- 


^ The Liverpool term “shipmen” is used in this article as the best English 
equivalent of the German <tSchauerleute.’’ The shipmen ” bo^h St^w and unload 
cargo, as distinguished from the quay porters who work, on shore. 



three out of fifty-three employers of ‘^shipmen” employ at least 
a few “Kpntraktarbeiter.” 

It may be mentioBed .thal) there kre ce^ain fe|tures about . 
the position of the “Kontraktarbeiter ” which make the whole 
system odious to the German ^It^nsport Workers’ Union. The 
system was introduced definitely with the object pf minimising 
the chances oi another strike. The men have from one to three 
shillings deducted from theii* wages each* week according to the 
amount of their earnings. This amount is placed to their credit 
in a sa'^ngs bank. they break their contrac‘.t the whole amount 
is forfeited, and in any case they can orfly take out from tjieir^ 
account one-half of what they have standing to their credit above 
stlO. That there is some weakness in the position from the 
point of view^ of relations between employer and employed 
would seem be indicated by the fact that nearly a third 

of the whole number of “ Kontraktarbeiter ” leave the service of 
the Port Emplnyers’ Association each year, in spite of the 
economic security which is offered. The following table show^ 
the years of engagement of the “ Ivontraktarbeiter who remained 
in the service of the Employers’ Association at the end of 1911 : — 

No. afc end , Engaged during 

ot 1911. 'Jm. Im 1909] i9la 19ll? 

1446 2^ 262 140 , 325 496 

But the ulterior objects of the employers, the relations of the 
“Kontra^tarbeiter ” to trade union labour and the ccwnpulsory 
thrift, are incidentals from the point of view of the system as an 
experiment in the technique of organising the* labour market. 
The nature of the machinery, not the spirit in which or the 
authority by whqm it may be operated, is at* the moment the 
important ^consideration. 

The whole of the Haibburg “shipmen,” other than the 
“Kontraktarbeitcr,” engaged not merely through, but actually 
aty five branch Labour Exchanges situated round the harbour and 
cond^ted by the Employers’ Association. Preference is given to 
men holding caCirds issued by the Association and know n as “Hilfs- 
arbeiter.** On^ when qo single “Hilfsarbeiter ” is available can 
a “Gelegenheitsarbeiter,” or casual, be engaged. Any man is free 
to go and take his chance at a “Gelegenheitsarbeiter ’’ at one 
particular Labour Exchange, from which alone casual ‘*^hipmen” 
are sent. An ^imploypr or foreman who wishes to engage men 
takes one of two courses. He* can go and pick his men at a 
Labour Exchaijge, in which case an officiiil of the Association 
stauda by, takes the registration cards from the men who are 




he can earn relatively large sums of money in a short space ol 
time. ^ In the second place, if the employers of a port require 
on the average (slky) 7,000 men,* bi^t on twenty or thirty days 
of the year require up to 12,000, they have no right to complain 
if on any particular day 12,000 men cannot be obtained. If the 
employers of^a port state that they require a certain normal maxi- 
mum of men, then they should pay for their lahouj at such a rate 
and in such a manner 4hat the total sum of wages is sufficient, to 
provide a fair wage all the year round for each of those men, 
except in so far as t^t Government is able, through its^ Labour 
Exchanges, to find other woric for some (or all) of them when 
they are not required for port employment. This may seem a 
bold proposition. But it is absolutely certain that nothing short 
of its recognition in practice can save the port employers o£ihis 
country from the reproach of conducting an industry, which !s 
as certainly and definitely parasitic as was agriculture in southern 
England under the old Poor Law. ^ 

In point of fact* of course, there is alreaciy a considerable 
amount of “dovetailing “ of casual dock labour with other emptoy- 
ments, and with the -aid of organisation such “dovetailing” 
could be improved.^ Such holdings or allotments may, in some 
places, provide a certain amoxint of subsidiary work for dockers. 

In dealing with the question of the mobility of casual labour, 
it is as important to enable a certain proportion of the labour 
to mov^in and out of a given market wich ease as^it is lo make 
all the labour within the market mobile. On both poinis 

hints may be ^jained from the Hamburg organisation. It is 
certainly better to meet the occasional j^pecialiy large demands 
for labour, abovti what may be teruKHl the normal maximum, 
by importing extra men when the supply of ordinary registered 
men is insufficient, than to go on. registering men Indefinitely. 
The Labour Exchanges of *the Hamburg Port Employers* 
Association are, of course, not connected with any outside *sys tern 
of exchanges. By bringing extra casuals into the stheme, 
they therefore incur the disadvantage of keeping ^ “ stagnant 
pools” of labour on the fringe of the system. Butrin any 
English casual labour scheme the natural course of procedure, if 
extra men w^ere temporarily required, w^ould be to take them, 
not direct from the streets, but from the registers of the ordinary 
Government Labour Exchanges, so that there would be as much 

• f • 

^ Though unfortunately in Li^’erpool* there is no sufllciently large quantity of 
seasonal labour in the summer to balance the busy winter season of the cotton 
warehousemen and dockers. 



opportuDity as possible of “dove-tailing** the/ work with other 
occupations. In dealing with the niobilily of! labour within the 
market in the Liverpool anjl Goole schemes ^ ihe Board of Trade 
(no doubt wivsely; abandoned any attempt to introduce any funda- 
mental alterations in the methods of engaging men at the outse^i.^ 
In Liver])ool the eighty or ninety separate stands, with the accom- 
panying system of “Umschau** (as the Germans call the 
unorganised search for v^ork), still e^sists.' The sur}?lus stands 
cannot yet be said to have achieved a great deal in the way of The Board t)f Trade waiting-rooms in Goole 
are, perhaps, rather more su^cessfcil as ceiitres from which mm 
are surnmon(»d to work. Ihu ihe almost fK^rfect system pf control 
of engagements of lahoar in the Hamburg Employers* Labour 
E^xebanges is certainly far in advance of anything in England, 
and seems to jspose of the argument^^ as to the impracticability 
, of reducing tla mind^er of places wh<-re men may be taken on.‘^ 
What German %'rn plovers c,an do in their own interest in 
/!]3^5fnburg, Fjn^lish employers can do in the public (if not in their , 
own) interest in Tjiverpool, London, Glasgow, or Hull. As 
regards ftie employment of do(*.kers at dilTerent classes of work 
(such as stevedoring, unlyading, and porterage), there is great 
variety of practice, both in English and in Gerriian poi^s. 
‘Obviously, the fewer the barriers between the different classes 
of W'Ork better. Probably the greatest diffTcuIty in arranging 
for men tqjie transferred from one to another is the fact Wiat the 
rates of wagS differ so widely. • 

The arrangements for joint weekly ))ays, w-hich are being 
organised by the Board of Trade, are undoubtedly valuable. 
Rome of the dock^u's’ leaders hold emphatically that “human 
•nature being what it is,** the system of daily pays or unlimited 
“subbing** does not conduce i.o tlip expenditure of the docker*s 
income in the be«t interests of himself and his family. Joint 
weekly pays are thus a step m advance. But what is really 
•heed!hd*js a guaranteed \veekly wage for the docker. No satis- 
factory solution of the problem will he found until a man, who 
does not receive a weekly niinimuni wage from a single employer, 
can only be hired through a public authority on such terms as 
would enable it taking into account such periods of em})l()yment 
as it could obtain for him in other occupations, to procure him a 
regular weekly jvage of a reasonable amount. It has been 

^ But not in tho little Iflancheyter cloth porters’ scheme. 

2 Although the Port^of Hamburg, owing to its geographical arrangement, lends 
itself to 8c|jemes organising labour more easily than London or Liverpool. 

NO. 89^— v<Jl. XXIII. ' c 



[march, 1913 

suggested that thb scheme of compulsory Unemployment Insur- 
ance should be Extended to dock labour. But it seems to 
the present writer xhat a somewhat different method of averaging 
wages would be preferable in this case. Such a method 
should, if possible, radically alter the psychological milieu into 
which the average casual worker is forced by the gamble for 
ei^iployment. All men who are not paid regular weekly wages by 
individual firms should be organised into a corps or guild, which * 
might in some cases be established by the local authority, and 
managed in detail by a committee represergbative of it,* together 
with the dockers and their employers. In this, or some such 
w^ay, me^} must be paid for w^aiting as well as for working. Then, 
and then only, will it be possible to require regular attendance at 
centres of engagement, and to avoid both unnecessary shortages 
of labour and the existence of an excessive outer fringe of casual 
workers. Probably no plan of Ijabour Exchanges, unaccompanied e 
by a revision of the system of remuneraticjn, wik form by itself an 
adequate basis for the effective organisation of the casual labour 
market, though no doubt such ])kns may in practice prepare*' the 
way usefully for further organisation. 

Needless to say, the wdiole problepi bristles with difficulties. 
Whether, as things are, there is sufficient readiness among the 
public, the employers, or the dockers, to grasp both the^ 
essential rights and wTongs and the essential practicaUnecessities 
of the t situation, remains to be seen. Perhaps* there is not. 
Perhaps the tragedy of those- wiiom ‘*no man hafE hired” will 
continue to be enacted year after year under early morning 
skies in the great half moons of men, which make up ^he 
“stands ” along*'the Liverpool docks. But the^ efforts of the repre- 
sentatives of employers and men and of the Board o^ Trade,* 
especially in Ijiver])ool, have made the outlook a little more 
hoiK^ful. England may yet give effective and practical recognition 
to the principle that even amotfg dockers “they also serve w^ho 
only stand and wait.” » * * 

Frederic, Keeling 


§ 1. In the treatment economic problems it is^ sufficient 

to know the equations **epresenting the demand schedule and 
the srmply schedule of a market as a w^hole. Other problems, 
ht)wever, ca'mujt he soKod, unless we also know the relation that 
subsists betw'een the aggregated demand or supply schedule and 
the demand m s^^ippiy schedules, if such exist, of the separate 
sources of demand or supply, of which the ma'rkot is compounded. 
For* the purpose of elementai'y discussion it is usual to assume 
that an aggregated demand oi sup])ly schedule is alw^ays made 
up by the simple addition of a number of independent demand 
or supply scliedules belonging to these separate sources. It is 
^obvious that, wheifthis assumption is made, the demand schedule 
of'^ery source of demand can be represented by a plane curve, 
and the demand schedule of the market by a further, curve 
obtained b^^^e simple coin])ounding of the curves representing 
the several sources; and that the saine pro] )Osilion» holds good as 
regards supply. I wish to inquire in what cinamistances the 
above assumption adequately conforms to the fac^s, and, when it 
• does noi so conform, what alternative assumption ought to be 
substituted for it. . 

§ 2. On the sidje of demand, the/asstim]>tion seems to be fully 
warranted as regards commodities that are desired w^holly for the 
direc/4 siitisfaction yielded by them, and not at all for the indirect 
satisfaction wdiich their possession contributes through our thirst 
for reputgition or distinction. On the side of supply, it seems to 
be fully warranted in respect of agriculture and the extractive 
industries, so far as these are carried on under conditions such 
that the part played by transportation, and, tlierewith, iJie role 
of “external economies” is uniiiqiortant. Furthermore, even 
when the assumption is liot fully v^arranted, it may, nevertheless, 
be warranted for the limited purjxise of the analysis of a particular 
group of probiem^*—those, namely, which relate lo disturbances 
of equilifoum so small that the aggregate output or consumption 

c 2 


of the commodity affected is not greatly changed. Thus, as 
regards demand, it) is reasonable suppose that a considerable 
change in aggregate consumption is ‘necessary to make people 
aware that any change in “commonness” has taken place, and, 
hence, to affect that part of anybody’s demand which turns upon 
the reputati6n-value of the commodity.^ Similarly, as regards 
supply, a considerable change in aggregate outi>ut'' would have to 
come about before the general organisation and external economies 
of an industry were appreciably affected. Analytically, the point 
may be stated thus. Though the quantity of commodity de- 
ni^nded (or supplied) at a pi-ice p in a market consisting of 
several sources cannot be approximately represented by the 

hv + /oP + ... ■ - , 

yet the change in the quantity demanded (or supplied) in that 
market in consequence of a small change of price Ap, can be 
approximately represented by the expression ^ 

+ /> + 

In short, certain relevant variables may fairly be regarded as 
constants from the stand]X)int of small changes. 

§ 3. In what has just been said the two most obvious influ- 
ences, whose operation sometimes renders our fundamental 
assumption inapplicable to real lif(\ have been implicitly indicated.' 
As regards demand, the essential matter is that people cki, in fact, 
desire 'many things, not merely for tbtur own sake,^ut, in the 
main, on account of the reputation or distinction which the pos- 
session of them confers. Thus, J. S. Mill wrote : “ Wlien once the 
means of living^ have been obtained, the far greater part of thefre- 
maining labour and effort which takes place oriel he earth has for its 
object to acquire the respect or the favourable regard ^of rrfankind ; ’ 
to be looked up to, or, at all /events, not to be looked down uj)on 
by them. The industrial and commercial activities w^hich advance 
civilisation, the frivolity, prodigality and selfish thirst of 
aggrandisement wdiich retard it, flow^ equally from that source.”^ 
To it, we may add, are due, in great measure, at once the desire 
for political success in England and business success in 'America, 
expenditure on personal adornment and on philanthropic wmrk, 
the concealment of inventions for profit and the revealing of them 
for fanie,^ the purchase of pictures for the home and the presenta- 
tion of pictures to public galleries. The consequence of this fact 
from our present point of viev\ is obviouss The quantity of a 

' Of. my paper Some Remarks on Utility ^ Economic Joujinal, Vol. xiii. p. 66. 

2 Mill, Three Essays on Religion^ p. 87. Cf. also Marsfiall, Prmciples of 
Economics, p. 162. * 

» Cf. Chapman on American and English methods, Work and Wage^, p. 41. 


distinction-bearing article that anyone demams at a given price 
depends, not merely on the pr^ce, but also onythe extent to which 
it is “the thing” to buy that article, and thus, indirectly upon 
the quantity that people in general are buying. As regards supply, 
the essential matter is “external economies.” WWe circum-" 
stances are such that organisation and so forth can be much 
bettered wheif the aggregate scale of an industry is large t£an 
when it is small, the quantity of the commodity that anyone 
supplies at a given price depends, rxot merely on the price, but 
also on* the quantity that people in generaii are supplying. 

§4. In circumstances of the kind just ’described, it is evideilft 
that, though the deinand \or supply > schedule of the market can 
be represented by a fJaiic curve, the demand (or supply) schedules 
gf th^ separate source's I hat make up the market cannot be so 
represented, .md cannot ];e simply add(id together to constitute 
the aggregate 1 demand (or supply) schedule. It, therefore, be- 
comes necessor^ to inquire whether, in these cases, any other 
assumption of a leasonably simple nature can be employed,* 
instead of the assumption of independent individual schedules 
with wRich we have hitherto worked. ’ One such assumption 
readily suggests itself. It is to the effect that the price at which 
anybody demands^ (or supplies) a given quantity of commodity is 
up by the addition of two parts, one depending on the 
quantity4hat the person in question himself demands (or supplies) 
and the otbe^*upon the quantity that the whole market coHectively 
deintods (or supplies). On this assumption, if p be the price, y 
the aggregate quantity demanded (or supplied), and yr the 
quantity demanded (or supplied) in the source, 

p = ^ ^y. 

This formiiJa is readily translated into the language of diagrams. 
The situation is the same as it would be if the commodity in 
questian consisted of two physical constituents. For one of the 
^ congtituents the market demand (or supply) curve is already in 
being, Isince the demand (or supply) price is known to depend in 
a. definite •manner on the aggregate amount. The other con- 
stituent 'is demanded (or ^Jiipplied) by the several sources in such 
a way that the demand (or supply) price in each source depends 
solely upon the amount in that source. The market demand (or 
supply) curve for the second constituent is thus found by*a simple 
addition of the ^curves tfor the several sources. We have only 
then to superimpose? the curve fdr this second constituent upon 
that for the first, to find the complete market curve for the com- 
modity.* The question we have now^ to ask is : Does the assump- 
tion just described represent the facts of life closely enough to 


be of practical vaiae in any of those cases to which, as we have 
seen, the simple Assumption proper to elementary discussion is 
inapplicable ? 

§ 5. I suggest that, on the side of supply, a field is available 
'to which this assumption is not, indeed, perfectly adapted, but 
is sufficient!}" adapted to yield some fruitful results. In applying 
it to this field, we are, it must be granted, ignoring the fact that 
the effect on the suppfy price of the source of supply brought 
about by a given change in the output of that source may itself 
be different, according as the aggregate output of the whole 
ir^arket is large or small. Nevertheless, we are approaching njuch 
more nejirly to real life than w"e are permitted to do by the 
method usually adoi^ted. In particular, we are enabled to fit our 
analysis more closely to the difficult problem of increasing r-^ turns. 
On the ordinary method, a market schedule indicative of increas- 
ing returns must be made up of a number of schedules of inde- 
pendent sources, some, at least, of which also iiidicate increasing 
returns. A system of that kind, however, is necessarily in un- 
stable equilibrium. Apart from obstructions due to the time 
element, to which Dr. Marshall has called attention, it wouldiseejn 
that one of the suppliers must drive', all the others out of the 
market. In real life, however, as Professor Chapman has well 
emphasised,^ when the commodity is one whose productiop' 
requires the help of subsidiary industries — a need attaching to all 
increasing return commodities — the separate sourced are. not renlly 
independent, and the presence of Increasing returns^m the market 
as a whole does not really imply i(s jiresence in the parts. In the 
phraseology emjiloyed above, the “constituent of the commodi^^y, 
which the sources produce independently, mgy obey the law ot 
diminishing returns in all tlie sources for any aggregate of-produc- 
tion, while the other “constituent^ obeys the law of increasing 
returns rapidly enough to give the character ofe'increasing returns 
to the supply schedule of the two constituents jointly. Tt is, thus, 
seen that the apparent conflict between mathematical analysis and 
experience, which has often perplexed the treatment ol increasing 
returns, may disappear even withoiit reference to the time 
element, if the assumptions from which the mathematical analysis 
starts are brought more nearly into conformity with the facts. 

§ 6. 'For the sake of symmetry and formal niceness, it is much 
to be wished that the formula, which is^thus seen to have value 
as regards complex supply, coiikl also be fitted, without too serious 
violence to reality, to tne facts of complex demand. Unfor- 
tunately, however, it must be confessed that this cannot, be done. 

^ Economic Joubnax., June, 1905 , p. 191 . 


First, in order that the formula may be applilable, the group of 
demanders making up a market must be so faf homogeneous that 
the desire for the possession of a unit of commodity on account 
of its distinction bearing quality, when a given aggregate of it is 
being consumed, has the same iioney value to each member 
the group ; and t-his condition is obviously unlikely tp be fulfilled. 
Secondly, the formula imjilies that the ‘‘part ” of a man’s derniJad 
price, which does not depend on the qu&.ntity of a commodity 
that be is purchasing, depends simply on the aggregate quantity 
that the market is purchasing. This condition would be fulfilled 
in respect of a commodity that was |>artly "desired for the disti^ji#**^ 
tion given by being “in tL^ swim” in general {e.g., toj^ hal^O, or 
for that given by being out of the swim in general (e.g., 
diamtods). In t'aci , however, distinction is usually to be found, 
not in'being n the swim in general, nor yet in being out of the 
swim in gene al, but in a combination of resemblance to certain 
persons and of • difference from certain other persons. If the 
consumption of a commodity increases amolig those classes witl^ 
wfiom 1 wish to be associated, my demand for it increases, but, if 
the aidsumption increases among those from whom I wish to 
separate myself, it decrejjses. Suppose, for example, that I am 
the mayor of a ^u’ovincial town. In that case, if the Victorian 
^rder becomes a more ordinary decoration for marquises, my desire 
for the decoration will be enhanced, but, if it becomes a more 
ordinary decoration for crossing-sweepers, I shall be tempted to 
regard its jlffesentation to myself aaan insult. Furthermore, both 
among the persons whom a man wishes to resemble, and among 
tfiose from whom he wishes to separate himself, some are usually 
much more important to him than others. Thu^, a given addition 
to thef aggregate consumption of anything will alfect iny demand 
price for a r*'' unit of it quite differently if the addition is caused 
by extra purchases distributed over the public generally, or by 
extra purchases on the part of one of my heroes. Caracalla buys 
anibel in honour of his mistress’ hair ; amber becomes a craze 
in Italy. • A princess is lamed ; court ladies limp. Majesty re- 
ceives the “General” of a religious body; the inverted commas 
depreciative of his “generalship” disappear. When a royal 
personage condemns a barbarous fashion, the osprey yields to 
artificial flowers; just as, wdien insiders, or, perhaps,- a single 
celebrated opergitor, b^r or bull a stock, outsiders follow blindly. 
As Jevons observed long since, people go to places of recreation, 
music, or art, because other people of a class just superior to 
themselves ^re likely to be there : “Under the circumstances,” he 
wrote,»“it is, as it seems to me, a positive duty on the part of 



[march, 1913 

fche middle and iipter classes to frequent the well-conducted places 
of popular recreatJ^Dn t6 help to raise their tone. If, to induce 
them to do so, they must have royal or titled ladies to flock after, 
then I hope that those who enjoy the wealth and the i>rivileges of 
^ this kingdom will bear in mind that they have duties also.” ^ 
The principle involved is of wude application. It indicates the 
laJ'ge extent to whi(*h leaders of society are able to direct the 
admiration and emulation of the public, and thus to encourage, as 
they will, literature, philanthro])y. yacht-racing, or contributions 
to the party funds. , ' * 

§ 7. To represent • the complex conditions described in the 
preceding pa ragrajd!, the formula set out above is wholly inade- 
quate. The demand of any r*'' source of demand in a market 
cannot be translated into any expression more Fimplo iha]^this : 

P ^ -i- Ml + ••• 

where the signs preceding Ihe various terms jnay bo either j)osilive 
or negative, and where all that (%an be said in genejal is that each 
,tei'm (whether it is ’positive or negative) is likely to lie larger, 
the larger is the argument contained in it/- In cases where tlu* 
influence exerted iqxm th(‘- demand schedule of source^ A by a, 
change in the consumption of source J3 depends in part on the 
conditions prevailing in one or more oi the other sourees, e\en 
this formula is too simple, and it is necessary to fall back on tlje - 
general expression : — 

r P ~ M/r, p], 

When the conditions are such that the demand scliocU.b^ of the 
separate sources in a market must be represented by formula' of 
this complex kind, problems, for the investigaiion of which it^^s 
necessary to go 'oehind the demand srhcdule qf the market as a 
whole, are still, theoretically, soluble; there are a siftticient 
number of equations to deterniine the unknowns. The solution, 
how^ever, must needs be an algebraical solution, and no trans- 
lation into the language of jiiane diagrams is j^ossible.^ 

A. G. iVciou 

* Essays on Social Ecfornii p. 2^1 . 

The above formula must also be invoked on the side of supply when the output 
(at a given price) of a typical lirm in one district dependent in a much greater 
degree upon the organisation (as represented by output) of other firms in its 
immediate neighbourhood than upon that of other firms in distant parts of the 
world (cf. Maegregor, Industrial Combination, p. 27). 

^ On the general problem discussed in the above paper the reader may be 
referred to the original article of Sir H. Cunynghamd' on “ SeCne Iinprovornent in 
Simple Geometrical Methods of Treating Exchange Valites, Monopoly and 3^.ent ” 
(Economic Jouenal, \ o 1 . II. pp. S5 et scg.), to a review by Professor Edgeworth of 
the aamo author’s work: “A Geometrical Political Economy” {ibid., Vol. XV. 
pp. 62 et scq.), and to an article by the present writer entitled ; “ Some Hefnarks on 
Utility ” {ibid., Vol. XIII. jip. 59 et scq.). t 


The r^iirpose of this papei ist to bring forward certain caijii 
siderations bearing upor the relation between Utjlity^ ancT" 
Income and the practi(*il application of the commonly accepted 
doctiine, which ir»{iy seem to be of a somewhat heretical bent. 
Tts ai^ninen^ falls naturally into three parts : (1) a constructive 
treatment of the relation between Utility and Income ; (2) an 
examination df^ certain fundanicntal grounds on which the law 
of diminishing utility, as commonly inter|5reted, has been sup; 
parted; and i3) a discussion of the ‘ilieged connection between 
the pnliciple of progressive taxation and the law of diminishing 

The best way of making clear the fundamental notion to 
J)e expounded is*to approach it gradually. First, then, we may 
notice tJiat, even if income is generally subject to diminishing 
utility, there are certainly points of discontinuity too i/nportant 
to be OT^tlboked. Thus in Fig. 1, units of income being 
measured along OX and units of utility along OY, let the 
successive ordinates of I(j represent the iiu*reases in the total 
utility of incom^ to a given person^ as incflme advances up 
to Ob? When his income is Ob, say, he decides to have a motor 
car; and, in order to have very simple case to deal with, let 
us imagine that, the possession of a motor car would not in the 
least affect the manner in !\diich he would spend income on 
otKer^ things or the utility attributed to them. Suptxise the 
cost of jUe car*, expressed as a continuous annual charge, is ub. 
Then “ihe annual value of the car to him must be af w^hen b/ is 
such that cde==efg. Now, if, after getting the car, his income 

, ^ Utility is taken merely as a symbol representative of degrees of preference or 
ohoioe, which are not to bo regarded as necessarily measuring impulses or feelings. 
TVirougb choices or decisions subjective human experiences are transformed into 
action. liy “ utilii^s ” I m^n the quantitative relations between these decisions 
or choices, which express^ while leaving stflreened, the internal happenings which the 
psychologist studios. (See also page 33.) 

* Throughemt thlb paper, to avoid circumlocution, individuals will invariably he 
spoken 8f, though it would frequently be more appropriate to speak of families. 




still increases, the ’curve of the new marginal utilities will obvi- 
ously start at h (when hb = da ) , and fall from that point ; for the 
car has displaced the things which brought the marginal utility of 
money below da. So, when this })erson’s income is a little less 
than Ob, its marginal utility approximates to bg : but, when it 
is a little more than Ob, its marginal utilitj approximates to bhy 
which is substantially greater than bg. r 

This demonstration holds of all expenditure on costly things, 
on the assumptions stated. But we cannot stop at this recogni- 


d • h 


O' at. X 


Fig. 1. * 



tion of discontinuity. The new ex])ensiye thing, besides cljsplac- 
ing certain things, may alter substantially the values attributed 
to other things — and is, indeed, almost bound to do so in some 
degree — so that a thorough-going rearrangement of the scheme 
of consumption in question is involved* Most schemes of con- 
sumption are discovered on close inspection to be coherent 
systems (of an organic nature, as one might say) the j)arts of 
which fit into one another and determine one another’s subjective 
value. Nor is this all. It will be fousd in addition (as the 
doctrine of class standards of IKing lays it down) that different 
schemes of consumption are as a rule variations of certain 
distinguishable types, which are kept comparatively intact over 


lengthy peridds by habit and social assimilation, though they 
are never so well-defined that their existence cannot be over- 
looked. Objectively viewed these typt s may merge into one 
another, but subjectivt'.*y — to the individual — they exist as dis- 
continuous. People usually advance in the social scale by distinct 

Let us consider the effects of sjjencling different incoHies 
with rehirence t6 some sj)ecific standard of living the cost of 
barely realising which is £300 a year. When the income is 
just about £300 year, and the standard is aimed at, the 
person in question feels pincdicci — that to say, the marginal 
utility of money to him i.. high. When, on the contrary, the** 
income is well over £ 30 : i a year, he feels himself to be in easy 
circirnstances — to say, tb(‘ utility of money 
is lov^. Tnf case, up to a ]>oint, is analogous to the much- 
quoted one O’* the colieeior who aims at a complete collection.^ 
As in that casfi, so in this, the marginal utility gets greater as 
the object pursued is approached. Hence* it w^ould seem as if 
incomes devoted to realising a given type or standard of expendi- 
ture oTbeyed some such law' as is exhibited by the curve of 

marginal utilities gfj in^Fig. 2, where the axes stand for the 

same as in Fig. 1.^ 

Next let us consider what happens to the adaptable person 
wdien bis income advances from about £300 a year to a consider- 
ably larger ohe. Ijet the curve gf j indicate the successivc^additions 
to total utility as his income varies when he spends it according 
to the £300 standard. Sooner or later, however, he alters his 
fotandard of living. Now tlie law of utility with res])ect to the 

new' type^ wall bq, of the same order as that with respect to the 

old, but the maximum of marginal utility of money will be 
reached, say, at £600. Let the curve gh in Fig. 2 repre- 
sent, the variations of the marginal utility of income with 
refeience to this type. This curve must, for a time at least, 
rise "-less steeply than the curve gf because increments of 
income just in excess of Oa have relation to a further removed 
end when expended with reference to the higher type.^ Let us 

^ The reader may be referred to Dr. W. R. Scott’s admirable analysis of this 
case in bis paper printed as one of tlie monoj^raphs published by St. Andrews 
University at the time of its quincentenary celebrations. 

^ The shape of the curve probably resembles that of a lop sided cocked bat. But, 
despite the more gradual <4esceiit on the right, the curve must soon got close to 
Ox, so far as the indivyiuars expendittye on himself is concerned, because many 
possibilities are excluded by the constraints of the type. 

^ For exai®ple, «aoiiey laid out on clothes, when the lowest typo was aimed at, 
would iJe spent with a view merely to comfort ; but, when a higher type was aimed 


suppose that the minimum income necessary for 'Subsistence is 
Oa, and ignore any utility connected with this. Then the higher 
standard will be adopted when inconfe is Ob, Oh being such that 
gfe~cde. So, as income advanced from a to k (on the assump- 
tions that there is no simpler type of expenditure than the one of 
which the yariations in utility are shown by the curve gj, and 
that yet a third ty))e of expenditure is not assumed) the marginal 
utility of income would be traced out by the line gfcdh, those 
parts of the curves w^hich are marked gd and cj remaining hypo- 
thetical. In Tig. 2 expenditure according to" tw^o standards only 

is admitted, but, of course, more than two might have ,/.o be 
allowed for. 

A few words may be said here to prevent any misunder- 
standing as to the nature of the curves of marginal Utilities of 
income in Fig. 2.^ Neither curve must be confounded with a 

af, some comfort would be sacrificed to appearances, though the sacrifice would 
yield nothing appreciable in utility till income was large enough for the t3rpe to be 
substantially realised. It may be remarked that there seems to be no unanswerable 
reason for supposing that the peaks of successive curves like those in Fig 2 could 
never, even for the shortest period, range upwards in hfeighij fcoi& left to right. 

,7TJ • 

* The equation to each of them is y — - when V stands for utility and for 


income, and an assumption is made in each case as to the soandaird of living to 
which expenditure has reference. 


successive utility curve. By the letter is meant a curve whose 
ordinates stand for the incremental additions made to utility 
as equal units of an income of a given amount are successively 
spent, on the assumption that each unit of income in turn is 
laid out so as to realise the gieatest immediate utility, con- 
sistently, nevertheless, with the end finally desired,; or, to put 
the same thing in another way, a curve whose ordinates niiftk 
from right to left the sacrifices of utility that would be entailed 
were the things purchased with the income instantly removed 
in the order in which the consumer wouid elect io relinquish 
them, all things being taken in units of ^qual cost. For every 
size of income a curvp v i successive utilities can d^^awn 
theoretically. Now for an income of any given size, sav Oi, the 
sum of the successive* utilities ('apart fron? fch^3 utility of the 
miiiim’hm inc >me Oa) would, of course, equal aiefg if gfe is the 
curve of the ioarginal uHlity of income as previously explained. 
But, for such a^i income, the final one of the successive utilities 
would be greater than ei, and the initial ode would be less thai^ 
ag ; and similarly for all other sizes ol income. The larger the 
income the lower is the initial one of tlu^ successive utilities 
(beyond the necessity nynimum), because it is spent in some 
degree with reference to a more distant end. The extra height 
of the final successive utility over the marginal utility of 
income .is caused by the fact that cjr Jiypothesi the former, 
regarded as *a sacrifice, cannot be reduced by modifying the 
expenditure of the rest of the incocne when the sacrifice is made. 
Further, it may be observed that, when the cRrve of marginal 
%itility of income begins by ascending, the curve of successive 
utilities must asc^d at first. It might be thoii^t that the latter 
could^not because it expresses, when read from right to left, the 
effects of losing successively -wdia^ can be dispensed with at least 
cost ^f utility. But this reasoning is unsoiuul, as can be demon- 
strated formally as follows. Tf x and y are two things, or two 
group® of things, consumed, and V xh/ stands for the utility of 
X and y when traken together, Ux for the utility of x in the absence 
of y, and Up similarly for the utility of y in the absence of x; 
then the reasoning implies that : 

(i) Ux-\-y Ux'^Ux 
can be directl; 5 i, deduced from : 

(ii) Uxly>Ux>U, 

and obviously “it cannot (see also page 32). When this false 


inference is drawn, the erroneous assumption (implying an 
atomistic view of experience) is ipade that : 


However, it ordinarily happens that, when (ii) holds, (i) holds 

«'It seems likely that the curves of Fig. 2 aivl the relations 
between them are such that the individual w^ho is not very poor 
is generally, if not always, on an eastern slope, so to speak. 
When he steps to thcy/higher type, ho comes,, as a rule, to such 
a position that money in his rew^ circumstances is still subject 
lu diminishing utility. So there are jumps; but there is seldom, 
if ever, any continuous increasing utility of income w^hen people 
are not passing out of a state of extreme poverty. Nevertheless 
— and this is the important point — the view' here expoundc J does 
involve the hard saying that the marginal utility of irirmey may 
be greater to a man after his circumslanct^s have improved.^ 

I am sure that this "is so in an appreciable number of cases ; 
t think it is not infrequently the case : and it may be the ruling 
case when certain income limits (which vary with the individual) 
are passed by inconsiderable amounts. It is a (Common exj)eri- 
ence to meet with people who have obtained a slight accession 
of income, and whose enjoyuKuit of life has obviously been 
increased quite out of projiortion to the accession of income. 
This cannot be explained satisfactorily If additions to income 
can only bring diminishing additions to utility. Such peojde 
(after taking a .larger house, say) are quite likely to be more 
careful about casual exjienditure (though possibly careless wdtb 
pence for reasons to be expounded), and people do not get more, 
careful with things as the things fall in value to them. Again, 
the w^astefiilness, or open-handedness, of many unusually well- 
paid working men long after their old habits, formed wdien they 
were much }X)orer, have had time to crumble away, as con- 
trasted with the penurioiisness of many men in a somewdiat Ivetter- 
paid economic class, at least suggests that the mar-ginal, utility of 
money is less for the former than the latter, if the two marginal 
utilities may be compared (see, below, pag(^ 83). Illustrations 
might be indefinitely multiplied. Of course, the ultimate test 
is furnished by the judgment of })eople who have had, in a reason- 

1 It should be pointed out that the doetrne is involved also ih such a case as is 
dealt with in Fig. 1, which does T^ofc iuoorporaie the fundamental notion here 
advanced. Such a case might be waived aside as an exception, but I should doubt 
whether, in view of the many very expensive items in the budgets of the rich, the 
number of such exceptions is so few thet they may he lightly dismissed. 


ably short period, wide experiences Of different incomes and who 
realise the points at issue ; but, unfortuhately, most people are 
not good at introspection. • 


It behoves us now to consider the c^ief reasons fftr which tjie 
view opposed to that advanced in this paper is held. Three main 
reasons are ordinarily given for the view that the utilit}^ of money 
invariably becomes less to a man when he becomes rich. Two 
are empirical, and the other is c 'priori. 

Empirically, it is pointed uut rhat, when well-to-do. a 
apt to be more careless about pence thriii when he is not su^eb off ; 
which must mean, it is said, that tht' penny has a lower marginalia 
utility ^0 him in the iurmer case. But must it? The following 
explanation is equally plausible for many instances, namely, that 
the penny ceas^^4? to hguio as th^' unit of account in deliberations 
about exp«ondirure when a man achieves .wealth. The penny 
might have lisen in utility, but, ncwertheless, be neglected* 
because^ of the greater aggregate utility of incomeo l^ime is 
too limited, in relation to the income to be spent, for the rich 
man to think of a penny-*-or, so to speak, his wealth makes his 
leisure too valuaWe for it to be worth bis while to throw it away 
in de\.‘sing plans for the saving of pennies.’ The poor man saves 
])ounds by loc^ldng after the pence ; but the rich man, by looking 
after the pence, would lose pounds in value. Moreover,* there is 
this further consideration, that the rich man is encouraged to 
think in large units by th('. high average ])rice of the things bought 
iTy him. So, des})ite the rich man’s carelessns^ss about pence, 
his money might •have been endowed with an access of utility 
on his becoming rich. In instituting a comparison, obviously 
we must not take as the standard unit a sum which is disregarded 
in OIK! of the ca*ses compared. 

Again, still empirically, it is maintained that the richer a man 
is the higher is the pay needed to induce him to do more than a 
given amount oi w’ork ; and that this must be because money has 
less utility to him when he is rich. But, assuming for the sake 
of argument that the first statement holds universally, the con- 

^ The explanation may be put crudely in this way. A man with, say, £200 
a year, has 48,000 penny units of expenditure per year to think about, and he has 
just time for the t»sk. But* a man with £500 a year would have 120,000 units 
of expenditure to think aljout if he made#the unit of account the penny, and for 
so extensive a task ho might not have time. He, therefore, makes his income 
manageable bjfc fallyig back on a higher unit of account and thinking of the 
problem m made up of 60,000 twopenny units or 40,000 threepenny units. 




elusion drawn does not necessarily follo'w. Greater wealth gener- 
ally means that leisure has a higher value, so that a larger absolute 
sacrifice is made in undertaking extra work when a man has 
become wealthier. Moreover, in the case in which the greater 
wealth results from greater earnings, the person iii question wall 
obviously be unwilling to under-cut himself, so to speak, by 
aiscepting wwk at a low i*ate of remuneration; and, apart from 
this, he will naturally take into account that the time given to 
the low-paid work might reduce his capacity to earn at the highly- 
paid work. These copfeiderations make it evident that any abbre- 
viating effect w’^hich rising incomes may have on the time given 
earning can be explained without reference to the marginal 
utility of income. 

^ The a priori argument puts it that the mobt- pressing wants 
are satisfied first, and that as w-e get w^ealthier less |cressihg 
w\ants are left io be satisfied, so that in satisfying them we get 
less utility. This argument seems so convincing because it is 
self-evident in one sense, which, luwvever, does not hapj)en to 
be the' sense that must be read into it w hen a contrast is drawn 
between incomes of different sizes. ^J’'he mere fact- that, wdien 
I have £200 a year, 1 buy six imitation (liippendaie chairs, rather 
than a single genuine one w'hich ('osts* as much as the other six 
put together, proves that J prefer the six imitations to the one 
original chair when I have an income of £200 a year.^ But it 
does not prove that, wlien 1 have the larger incctrae and have 
bought the costly t^hair, and pompaie my enjoyment of it under 
the new income, conditions with my enjoyment of the six cheap 
chairs under the old income conditions — that then 1 must judg^' 
the former enjoyment to have been greater than the latter.^ 
Some of the defences of Ihe doctrine that the inarginainitiliiy 
of money must alw^ays be less for the larger tlian for*the smaller 
income are, it would seem, less impregnable ^han they appear 
at first sight. 


Another important line of defence remains. Some of my 
readers may be prevented from according full assent to the 
notions brought forw^ard in this article by their accej)tance of a 
principle of taxati«m that is steadily winning the ^jonfidence of the 
public, namely, the progressive principle, ♦which recommends 
taxing the higher incomes ai a higher rate. This principle is 
^ See also pp. 29, 30. 


not uncommonly deduced from two propositions : (1) that equal 
proportional sacrifice should be* entailed by taxation, and (2) that 
the marginal utility of mcome falls continuously in such a way, 
as income increases, that taxation of all incomes at the same 
rate would cause proportional sacrifice of utility to vary inversely 
as income, other things being equal. ^ ^ 

It is first necessary to bridge the gulf which has been left 
yp»wning between the experiences of different individuals (see 
note on page 25), since the kind of tax^^’i^^^ refen ed to above 
aims, as it is put, at making th^ sacrificec in utility or satis- 
faction of different people ^qual in relation to their incq^ja^fi^r 
mility or satisfaction. There is no gulf to bridge il we can 
think of satisfaction as, homogeneous ^nd measurable (at least » 
theoretically) as between different people.^ JBut 1 am unable to 
think of it in this w’ay ; and, to he on the safe side, and avoid 
dogmatising at^iut a psychological question, I never mean by 
utilities or satisfactions more than conventional symbols repre-^ 
se»tative of tue relations between an mdiviHuars preferences.'^ 
Consequently, the satisfaction of one person cannot be con- 
trasted with that of another person, according to this view, for 
obviously no preferential relation can link the two experiences 
together. However, there is no real difficulty when we come to 
, a political question like taxation, since the gulf is at once bridged 
by the doctrine, which is essential to much politicjil (]pctrine, 
that people who in all external relations seem to be the same 
must be treated as if they were the same, or, in other words, 
that the State must not be a respecter of persons. In short, the 
fiction on which we proceed in taxation (which need not be 
• dt^xended here) is to* regard different people in the same or different 
circumstances as the same jiieople in the same or different circum- 

NoV, given the correctness* of the theory in this paper, the 
second proposition referred to above does not hold with any over- 
whelming degree of universality at least. On the contrary, it 
would seem likely that, in many cases, a man’s proportional 
sacrifice of utility would be increased when his income became 
greater, were his income still taxed at the same rate. Does 
acceptance of the ideas here expounded, then, involve discarding 
belief in the progressive jprinciple, and even maintaining, for not 

* Every conceivable kin^ of diini]:^shin§ utility of income does not, of course, 
necessitate progressive taxation if e^ual proportional sacrifice is to be secured. 

“ I am taking^** satisfaction’' to refer to a purely subjective state, and “ utility ” 
to refer to vhat is predicated of the thing producing it. 

See no|e on p. 26. 

No. 89. — VOL. XXIII 





a few circumstances, ttiat the rate of taxation of the higher 
income ought to be less than that of the smaller one? If it does, 
we are certainly in a predicament, for most political philosophers, 
I imagine, have a sort of instinctive belief that the progressive 
principle is ^somehow right. But happily it does not, as I shall 
hope to show. With an easy mind we may depy the truth of 
the second premiss given above to justify progressive taxation 
(namely, that income must be subject to diminishing utility), 
because there are grophds for hgi^ing that, the first premiss (that 
equal proportional sacrifices of utility should be aimed at) is 
umrua,§^lso. Indeed, the real basis of taxation may be quite other 
than a principle of distribution of utility-sacrifice. 

Let us put the cru(jial question to ourselves in this way. 
Should we think it fair to reduce the rate, of taxation pf large 
incomes if, by a miracle, income above a certain amount became 
subject to immensely increasing utility ? An t answer in the 
^affirmative is entailed if we believe that taxation should aim at 
equal proportional sacrifices of utility ; but it seems absurd- to 
suggest collecting less money for the State from the rich and more 
from the poor on the ground that the rich have become really 
richer. This crude reductio ad absurdum may serve to make the 
reader doubt whether the principle of equal proportional sacrifice 
of utility can be sound. 

But<3 if this principle is not sound, what isr the basis of 
progressive taxation? It is,, in part at any rate, somewhat as 
follows, I should suggest : that the wants satisfied by the earlier 
increments to income are usually of more importance socially 
than the wants' satisfied by later increments to income, whether 
the satisfaction of the former causes more utility or .wdt. " In 
speaking of the equity of taxatiqn, we are obvioilsly talking 
ethics, and therefore the wants primarily dealt with must be 
adjudged not according to the v»lue of their satisfaction m fact 
(positive value), but according to the value of their satisfaction 
in a moral scheme of consumption (normative vahie). ^The' poorer 
a man is, the more likely is some confiscation of income to cause 
him deprivation of comforts which add'to efficiency (meaning the 
social value of his life) or even of necessities of efficiency; the 
richer he is, the more likely is the curtailment of his consumption 
to be effected at the expense of luxuries which add little or 
nothing to efficiency, or may ?\en diminish it. So the right basics 
has a certain reference to faculty. If it is put in terms of sacrifice, 
it may be said that equal proportional sacrifice is^ the right thing to 
aim at, only the sacrifice meant must not be one of utility (positive 


value) as commonly understood^ If this kind of utility comes into 
the reason for progressive taxation at all, it can only do so, accord- 
ing to the opinions expressed here, in the event of its being 
arguable that the man who enjoys more utility than his fellows has 
social obligations much greater than theirs ; and, if it figures in this 
way, the case far progressive taxation, so far a^* it depends u{)on 
utility, would be strengthened rath^'than weakened by thfe con- 
tentions in this paper as regards the connection between utility 
and the magnitude of income. ^Fhat seeniff to me false doctrine, 
as regards the basis o# progressivtf taxation, has no doubt been^ 
occasioned, in some degree, by a confusion between the ’'^sfgtlScy 
and the importance of s, and by the assujnption that, when 
wants are satisfied according to degrees of urgeiicy, their pro- 
greBsive% sai i's"j,ction must result in continuously decreasing 
accessions of utility d 

S. J. Chapman 

To make tlie argument doiinite, 1 have .selocti d for examination the utility- 
suerilico tUeory wbjcb seems to me most piausiblc But the argument in general 
liolds when any other utility-sacrifice theory is held, since, to deduce the necessity of 
progressive taxation from any of them, diminishing utility of income must be 
assumed, (See Edgeworth, Economic Journal, vol. VII, p. 560 ei seg.) 


market consists essentially of specialised 
machinery by which goods are conveyed from one group of persons 
to another ; properly 8j>eaking we should perhaps regard it as 
constituted by the whole of the organisation by which the goodfs 
are moved in their passage from one to the other group. Railway 
companies, merchants, shopkee|X3rs reduce the co^t of conveyance 
^‘of material goods; Banks, issue houses, brokers reduce the cost 
of conveyance of capital ; in each case the market is essentially’^ 
organisation for the transport of goods between persons and its 
social contribution is to be measured by the economies of transfjort 
introduced by the agency of its specialised skilly and machinery. 

The market for capital consists then of all the machinery 
lying between those who save capital and those who usctit. But 
the sense in which the term “capital “ is used needs some elucida- 
tion, for evidently the monefy market does not deal in durable 
goods, like bouses and machines, to which the term is usually and 
properly applied. c 

The act of saving is one of forgoing the enjoyment of 
which may be commanded from society’s workshops ; ij isfSerefore 
an act which liberates social, rescturces from the production of 
these immediately consumable goods, and frees them for other 
purposes. The product of the act^of saving, the commodity of the 
money market, is therefore a control over that part ol social 
resources which are thus freed, and it is this bontrol over free 
resources, this “command over capitaU.* (in Dr. Marshall’s terms) 
which is conveyed from one group to another, and which enables 
the business man into whose hands it passes to adopt roundabout 
processes, and set up the factories and machines which constitute 
capital proper. ^ v 

The machinery constituting the marked; for capital, in this 
sense of free capital, consists of the organisation of the banks, the 
Stock Exchange, trade credit, the brokers, solicitors, tinist com- 
panies, and a great variety of financial institutions adapted to 


special needs.^ The essential function of each part is the con- 
veyance of capital between i>eiBons, but the characteristics of the 
one shade imperceptibly into those of the other in adaptation to 
the varying characters of the ^^rroups they serve to connect, and 
separation must be made on the ground of somewhat fortuitous 
characteristics rather than by any true “carving at the joints.”^ 

If we sepat&te these parts of the market b> reference to the 
nature of the security in which they deal, we may mark off fairly 
clearly the organisation of issue houses, ^brokers, jobbers, &c., 
dealing in the homogeneous &»*ou])b of rJegotiable securities — 
stocks and shares ; but this organisation is comi:)osed of two p^ts.. 
analytically distinct, which must be separated in order tvi isolate 
the market with which '.his pa|>er is concerned. 

The first part consi '.ts of issue houses, brokers, underwriters, 
&c., wko. are concerned with new issues, and whose function, 
quite clearly, hi^to convey free capital from the group who save 
and owm it, the pure capitalist class, to the group who use it, the 
pijre entrepreneur class. By its agency an enormous amount of* 
capital Jhas been carried from one group to the other. 

But the presence of this quantity of capital in the hands of 
entrepreneurs implies tlui supply of certain services, such as 
waiting and uncertainty-beai'ing ; that is to say, it implies a burden 
of dis’dilities falling upon the capitalist class who have forgone 
the use ef their resources ; and the second |)art of the market, the 
Stock Exchange, consists of an organisation lying wdioll^ within 
this group of capitalists, the functiou of which is to distribute this 
burden among those who are whiling to bear it at the lowest price. 
'Hius the device of splitting up securities into ordinary, preference, 
d^ierred sharet, &c., concentrates Uncertainty (i.c., “Bisk”) 
on certaTn cj asses of securities, and allows uncertainty to be borne 
by those who, at any moment,* are jvilling to do so most cheaply ; 
while ^8 the circumstances or tastes of the capitalist change from 
tim^to time, the organisation enables him to transfer his burden 
to others who are then more willing to undertake it. 

There is thus a continuous process of shifting in accordance 
with changes in the particular circumstances or outlook of the 
individual capitalist, and the social service of the organisation 
by which this distribution is effected between different persons 
and different times is measured by the reduction in the real costs 
of supplying the® quantify of capital which has been transferred 
into the hands of the entrepreneur*class. 

Bringing Jjogether these two parts of the market, we see that 
they are* interdependent parts of an organisation whose social 




function is that of conveying capital into the hands of those best 
fitted to use it; of bringing together capital and business power, 
thereby lowering the cost of production of business undertakings 
and increasing the national dividend. 

The speculator performs important seiwices in both these 
naarkets ; in the former, for example, he acts in effect as an unpaid 
underwriter, and may exercise an important influence, sometimes 
for good, sometimes for evil, upon the direction in which canital 
is supplied. We are, concerned here, however, only with his 
services in the latter market, the Stock Exchange, considered as 
^ftjj^j^nisation for the continuous redistribution among capitalists 
of the^isutilities involved in the supply of capital outstanding in 
the hands of entrepreneurs. We need to know', therefore, what 
is the nature of those disutilities, what is the economy which he 
effects, and finally whether the payment which he rec^ves for 
his services is governed by the normal laws whicJi confine the 
reward of the prodycer wuthin the value of his contribution to 
" society. The result should indicate the social contribution of Jhe 

The supply price of capital is c*om)^x)site, and consists of three 
payments corresponding to Ihe three costs or disutilities involved 
in its supply. 

Pure waiting is taken to mean the service of supplying capital 
for periods terminable at wnll ; its pricc», is thr; net rate of interest.* 

The bearing of Risk, or more properly^ t Tj-jcertainiv. needs no 
description; it is a service which is general) y disagreeable, and 
therefore commands a payment. The third element, the bearing 
of Financial Insecurity, w^as discussed by the present writer in 
article in The Economic Journal in September last; 
only a brief description here. One of the important circumstances 
of business is the condition that, owing to uncertainty as to the 
future, a business man is constQfntly exposed* to the chance of 
sudden demands being made upon him, and consequt ntivof sydden 
contractions in the available resources at his disposal which may 
seriously hamper his operations, and may even Result in a 
bankruptcy, although his assets largely exceed his liabilities. If 
a business man lends a temporary superfluity of capital on the 
condition that it is repayable on demand, his position is much 
the same as though he retained it in gold in his safe. If, however, 
he supplies capital for longer periods, as*‘on debentures or against 
a mortgage, his power to meet* emergencies* is thereby w^eakened, 
and there is an increase in his Financial Insecurity, for bearing 
which he naturally requires to be paid. The bearing of Insecurity 


is therefore a real cost in the supply of capital, and the practice of 
the market shows it to be a service which commands a definite 
price. Thus “overnight “•money is cheaper on the average than 
the rate on three months bills, and the rate on three months bills 
which are marketable is lower than the rate on equally secure 
three month loons, which are not. Every increase in the market- 
ability of a sewrity diminishes the Insecurity borne by the capi- 
talist, for it makes his invested resources more available in the case 
of emergency. The work of the Stock Exchange in inoieasing the 
marketability of securities is therefore, Hi effect, the service of 
reducing this element of cost in •the supply of capital ; its very 
great imjx)rtance is seen when ii is realised th in 
the absence of this orgo aisa-tion probably only a small fraction of 
the present supply of capital would be forthcoming for railways 
&nd siijiilar radertakings which require the use of capital for long 
periods of tirro. 

It is usual iS) include among the costs of production of capital 
the trouble involved in its administration*; but the economiei^ 
\^hich the market effects in the trouble of dealing in stocks and 
shares* is already ^timated in terms of a reduction of financial 
insecurity, and the other more important part of trouble involved 
in watching investments is more properly considered as a part of 
the cost of bearing uncertainty. In considering the social service 
perforated by the market we may avoid separate consideration 
of its work in* reducing trouble, just as, for other reasons,, we may 
neglect the consideration of any effects it may have in reduciiig 
the cost of pure w^aiting. We are therefore left4o deal with the 
icosts of the two remaining elements, the bearing of Uncertainty 
' apd Insecurity ; %nd w^e may pass directly to the more limited 
proW&f of measuring the contribution of the speculator to the 
organisation which reduces ttie amount of these tw’^o disutilities 
by facilitating their rapid redistribution among the group of 
capitalists m accordance with* the changing circumstances of its 
* me*mBers ; thereby reducing the burden cast upon the capitalist 
group by the transference of the quantity of capital lodged in the 
hands of entrepreneurs, or in other wwds, lowering the cost of 
production of capital. 

The Service of the Speculator . — Commercial operations arise 
from the profit , to be drawn from price differences of two kinds. 
Differences of price between two points of space call into being 
organisations for obtaining knowledge of them, and for the trans- 
port of goods between the two places. Differences of price 
between tWo points of time result in an organisation for forecast- 




iag themt ancf for ‘'carrying ” goods bet wen the present and the 
future. The two kinds of operation, the trading and the specula- 
tive, are essentially similar; they are acts of transport effecting a 
redistribution of goods, which tends to continue until the interval 
between prices declines to an amount which just covers the cost 
of the marginal transaction. 

‘"It is therefore quite clear that the direct net social contribu- 
tion of the railway company and the speculator must be measured 
by the reduction effected in the cost of carrying goods between 
persons separated in tiie one case by space and in the other by 
time ; and that the product arising from this service of transport 
conibiylo like that of any other producer, in a utility added to the 
commodity dealt in ; in this case it is a utility of position which 
is apparent in the form of an increased exchangeability of goods. 

The costs of production of this utility, in the case^of thd 
speculator, arise, first, from the condition that the carriage of 
goods through time requires the use of capital, &nd therefore a 
pharge for interest; and, secondly, from the condition that the 
essential variability in value of these goods involves a charge f&r 
the bearing of Uncertainty. The former element of cost ihay be 
taken for granted : the latter indicates the essential service, and 
leads directly to a consideration of the efficiency of the speculator 
first in reducing Uncertainty by forecasting changes in value, and 
secondly in bearing that residue which he is not able to elhninate. 
It needs tto be shown that this service is performed Inore cheaply 
by the speculator than by the public. 

In order to tbring this reasoning nearer to actual business 
conditions it is convenient to break off the argument at this pointy 
and to trace the effect of the speculator’s work-in the Stock^^d 
Produce Exchanges. 

The distinction between the^ speculative and the non-speoula- 
tive must be made rather between transactions than between 
persons ; by a speculative transactidn is meant one which is con- 
ducted by a person whose operation is influenced mainly %y 
consideration of the future capital value of the security* (or other 
goods) in which he is dealing. 

In a produce exchange for, say, cotton, fluctuations in the 
value of the commodity when regarded over long periods of time, 
tend to cancel one another. But, although in the long run they 
may inflict no direct money loss upcm the tnarket* the possibility 
of their occurrence is always uncertainty to each holder of 
cotton. The manufacturer who carries his own cotton may in the 
long run have suffered no direct money loss, bvPt he* will have 


been continuously subject to imperfectly foreseen changes in his 
business situation : and he will ^usually be" willing to pay a price 
for the removal of this evii by buying or selling a future, the 
price of which will (normally) contain a payment to the speculator 
for his service in carrying cotton through time. He desires 
protection against such of these unforeseen changes as arise from 
fluctuations in the value of cotton , and obtains :'t by shifting the 
burden of Uncertainty to the speculative market. W:jre he not 
to do so, the Uncertainty to which he would be exposed would 
require him to maintain a reserv'^ of resoui ces, the loss of interest 
on which would be a measure ot *tbe inj.^ry which Uncertainty 
inflicted upon him. ^ 

The holder of a security, on the other hand, is necessarily a 
bearer of Uncertainly. He- cannot separate the Uncertainty from 
his secui^ty ar 1 effect a simple transfer to the speculator, though 
this result nuy be attained in pari by other methods. The 
security holder dosires prot (action from imperfectly foreseen events 
which arise from causes external to the market— from those cir- 
cumstances of his business situation which may cause financial 
emergency. The imperfect availability of his invested resources 
limits his power to meet enjergencies, and therefore carries with it 
Financial Insecurity. He will therefore be willing to pay a jobber 
for its removal, and the amount of the jobber’s “turn “ will depend 
•upon thttcost of his speculative service, that is, mainly upon the 
Uncertainty which he bears during the interval which»elapses 
before he can undo his transaction. • It is not, of course, intended 
to imply that the amount of the jobber’s turn (plus the broker’s 
fte) measures the social cost of transferring a security from one 
♦nvef^JjQj to another#; this amount will generally be a payment for 
only a*pE1:t,of the process, the remainder being effected by the 
other speculators in the market. ^ 

Tljp work of the jobber appears in the Stock Exchange as an 
increased facility for marketing*; that of the dealer in the produce 
fnatkef as a bearing of Uncertainty, but although its aspect varies, 
the same speculative operation underlies both, and its effects are 
quite symmetrical. The pjroduce broker, by taking over from the 
manufacturer a burden of Uncertainty, enables him to invest his 
resources more closely; his costs of production fall, and the gain 
is shifted to the consumer in a lower price of his product. The 
jobber in the saime way removes Insecurity from the owner of 
securities ; the supply price of capital is lowered, and the cost of 
production of business undertakings is reduced. The speculative 
service, fandamefitally similar in the two cases, both in its nature 




and in its cost of production, effects a cheapening in the process 
of transport. The saving is shifted to the cotton manufacturer 
in the form of a reduction in the costs at which he can meet the 
Uncertainty falling upon him ; it is shifted to the security holder 
in the form of a lower cost of marketing, that is, in the reduction 
of the burden of the Financial Insecurity to which he is exposed. 
The economy which the speculator can effect J.n the costs of 
transport through time depends, first, upon his ability to hear the 
Uncertainty of which he relieves others ; secondly, u(;)on the extent 
to which he can redupe its amount by his skill in forecasting the 
future. ‘ 

the conditions obtaining in these highly developed 
markets, where the speculator's direct service is a competitively 
produced utility, in effect sold on the market to competent buyers, 
it is a necessary inference that the gain to the purchaser exceods 
the cost to the producer, and accordingly that the supply of the 
service results in a net social advantage. This conclusion is 
reinforced by considerations derived from an analysis of the 
speculator’s payment in such conditions. * 

The Payment of the Speculator . — li is said that a Tlolhschild 
laid the foundation of his fortune b^ a successful speculative 
transaction ; he obtained the earliest news of the victory of 
Waterloo and reaped an enormous profit by a skilful operation in 
Consols. His gain may have been a million pounds and Jiis costs* 
£1Q,0()(5;; his service' to society consisled in tempcfrarily making 
Consols rather more marketable, and in raising their price a day 
or perhaps a few hours earlier i.han would otherwise have been 
the case. It would have been to his advantage to have invested^, 
if necessary, perhaps £800,000 in the organisation of intelligence^ 
yet the advantage to the community would certainly hav^ Been no 
greater ; £1 ,000,000 would have been paid to obtain a trifling 
improvement in the market. It is evident thaj; the principle of 
payment here is quite different from that which normally obtains. 
The speculator’s profit is not drawm from the value he ciontHbutes 
to society ; it is limited only by a difference of price multiplied by 
the volume of his transactions. The social advantage of his 
operation is not measured by this difference ; it consists of the 
additional utility added to the product by the speculative trans- 
action, an amount unrelated to the source of individual gain. 

The condition that the gain arises frewn a difference between 
two prices does not, how^ever, ^n itself offer any explanation of 
the peculiarity, for the profit of a manufacturer or retailer is 
derived from a similar source ; some further inquky i^ necessary. 


When the manufacturer of a freely produced commodity 
employs skilled chemists in research, the salaries he pays are 
similar to the expenditure* of the speculator in perfecting his 
judgment ; each will press his investment in this direction up to 
that point beyond which he would expect no further gain. From 
his chemists the manufacturer will get an output of ideas which 
increase his productive efficiency ; they swell hi« profits, but thef 
cannot, even when monopolised, add to his gains an amount 
greater than the benefit they confer upon society. Indeed, it will 
generally happen that the individual (maiginal) gain will be less 
than that of the community: in far as this is so» investments 
in knowledge tend to b('. (. aiaied less far than is desirabl#. The 
extent to which the proJiicer of new ideas should shate in the 
social advantage of Ins improvement cannot be precisely stated 
in general le ms, buf* the existence of the Patent Acts is good 
evidence thaf ^he individual profit tends in these cases to be too 
small rathoT th?^&i too great. 

Similarly with the vsp^culator ; his agency'will supply him with^ 
knowledge, the jxissession of which reduces his costs of production 
by lessening the Uncertainty which he takes over. So far the 
two cases are precisely similar ; the investment of resources in 
intelligence yields differential advantages of production ; if the 
knowledge is monopolised the individual profit is still confined 
' within the value of the net gain in social efficiency ; and if con- 
ditions of true competition obtain, the advantage is rapidly ‘shifted 
to the public in a lower (or more fjtvourable) price of the product. 

But there is this difference. The inte11iger>ce acquired by 
%lie speculator has the effect not only of reducing his costs, but 
'of injuring the machinery which regulates the reward of the factors 
of prodiftitjon. Society protects itself against exploitation, not 
by directly allotting similar •payments to similar costs, but by 
proyj|3i^^ fGr thg*- free exchange of the products of those costs. 
In-order that the community khall give no more than it receives 
*it is essential that buyer and seller should have equal knowledge 
of the commodity in which they deal ; any variation from this 
condition destroys the efficiency of the method by which reward 
is regulated. For this reason, therefore, the superior knowledge 
of the speculator enables him to transfer wealth from others to 
himself ; and this advantage can be destroyed only by the most 
complete competition which will reduce the price of his services 
to their costs of production. The same condition is essential in a 
trading operation ; a single ^ arbitrageur operating between two 
markets, aTthowgh dealing with willing buyers and sellers, may 




draw enormous gains from his greater knowledge of prices ; but 
a single competitor can put buyefs and sellers on an equality in 
knowledge with the arbitrageur, and reduce the profits of both 
to a normal payment for the convemence which they afford to 
the public. 

In the absence of such competition the private gain of the 
s|)eculator exceeds his social contribution, and h© tends to press 
the production of intelligence beyond that margin at which its 
social value is equal to its cost, up to that point, at which his 
individual profit is maximised. 

The point of view may be Slightly shifted and the speculative 
operation regarded as a whole. It consists essentially of a 
purchase at one jxiint of time and a sale at another ; the redistri- 
bution of commodity effecting a net gain of utility. Any 
cheapening of the process which produces this utility is a gain of 
social efficiency, and enriches society (regarded as a group con- 
taining the speculator) by the excess of this utility over its cost. 
cBut the circumstance that this reduction of cost is accompanied 
by an unduly large transfer of wealth to the speculator tends to 
make him press the application of resources in this direction 
beyond the point socially desirable, and so to bring about a net 
social waste. 

The provisional results may now be summarised. The direct 
service of the speculator lie.'? in reducing the covst at whkh goods 
are conveyed between persons separated by time, 'this operation 
is a process of production which, like any other, adds utility to a 
saleable product; a utility (.f position which facilitates exchange, 
and in the case of stocks and shares reduces Financial Insecurity, 
thereby lowering the cost of production of capital. The expenses' 
of this process arise from the costs of supplying skilled judgment 
of the future, and the service- of bearing Uncertainty. The invest- 
ment of resources in the production of intelligence tends Jo be 
pushed too far, for the reason that the possession of superior 
knowledge allows the speculator to transfer wealth from others 
to himself to an extent which has no relation to the value of his 
service. Hence arises a divergence between social and individual 
interest which can be removed only by the presence of competition 
sufficiently free to eliminate the ignorance of those with whom the 
speculator deals, and to reduce his profit to the cost of production 
of his services. In speculative opcrations®it is thi^refore only the 
force of free competition which gives society -that natural protec- 
tion which, in other cases, whether under monopoly or free 
competition, confines the profit of the individual \/ithin the value 
of his contribution to the community. , 


The limited nature of this provisional conclusion soon becomes 
apparent, however, when we turn to the actual work of the 
speculator on the Stock Exchange, whi^h may conveniently be 
considered by looking at the general conditions governing his 
costs of production. The first element is, the bearing of Uncer- 
tainty. The real cost of supplying this service is probabl/ 
lessened by the speculator's temperament, his power of doing so 
must certainly depend very closely upon his facilities for obtaining 
control over capital ; for the exj>oBare of to a given risk of loss 
is an evil which obviously diminishes with every increase in the 
quantity of resources dis}>o>c.ble, and in the variety of their dis- 
tribution. Both the wo*» ah of the iobber and other spe.'ulators, 
and the service of the l^anks in extending their control over 
rSsources, are tliereiore of the. first importance in reducing the 
costs of the ma**ket. 

The second Element consists of the reduction of fTucertainty. 
As knowledge of the future extends, Uncertainty declines inde- 
fiifitely ; at its vanishing point the speculator’s service lies entirely 
in the production of intelligence. Probably the skill and experi- 
ence of the jobber enable^ him to effect a considerable economy 
in this way, but, passing outwards to the public, knowledge and 
judgment, though corrected to some extent by the broker’s advice, 
•decline jn value and rapidly reach a point where they are 
negligible relative to ignorance. In these outlying reg4)n8 the 
social value of the speculator becomes indeterminate. He in- 
creases the marketability of securities, and therefore reduces 
Insecurity, but while he bears Uncertainty for a j>ayinent which 
•is likely in general^to be negative, he increases the amount to be 
borne by the market by the incalculable fluctuations of price which 
result from his fitful operations. This ambiguity in the social 
effects of the unskilled speculator shows immediately that the 
simple statement of his direct product does not exhaust the 
Sccount of his influence upon the market. His primary service 
consists of. a commercial operation between two prices separated 
by time and results directly and necessarily in a diminution of 
Financial Insecurity. The efliciont performance of this act requires 
him to reduce the Uncertainty falling upon himself, and this he 
does merely by obtaining a superior knowledge of the future 
course of pricey But twhile his operations will result in prices 
tending to move towards those which he anticipates, it is by no 
means necessary either that they should be steadier or that they 
should i^ov 6 towards prices more nearly approximating to invest- 
ment values. The gathering of his profits is independent of his 
influence both upon the variability and the accuracy of price. 




Every speculative act influences ^price, but the speculative gain 
may be independent of the social results of that price movement ; 
the control of price in the interests of the community is not a 
service deposited with the speculator by economic circumstances 
which make his profits dependent uix)n its performance. The 
social value of his influence on prices may be positive or negative ; 
it is purely fortuitous, and depends, not upon the self-interest of 
any business group, but upon the particular environment in which 
the speculator operates. 

This circumstance suggests at once that in attempting to 
estimate the social importance of a process of production it is 
insufficient to consider only its direct product ; account must be 
taken also of any other social results involved in its operation. 

The profit of producers in general is limited by the yalue of 
the direct exchangeable product which alone forms the incentive 
to their operations ; the social gain is given by thfe algebraic sum 
rof the value of both 'direct and indirect results. The services of 
a railway involve an indirect effect, a surreptitious educative 
influence u^xin the community which, using Professor Pigou’s 
terms, make the social, greater than the individual, net product; 
in such a process as banking tliese indirect results arc j)erhaps 
negligible ; in the building trade the social gain is less than that 
of the producers by the evil eltects uj)on labour of its, discon- 
tinuous employment, evils wliich do not fall wholly upon builders, 
but are distributed over society in general. It is evident, there- 
fore, that the indirect effects of various branches of production 
pass from a maximum positive value through zero, where indi- 
vidual and social net product are equal , ta a large negative » 
quantity ; the series is distributed between two sucii extremes as 
the output of new ideas and the process of production of a pick- 

The provisional conclusion that in the presence of free com- 
petition the direct service of the speculator must be advantageous 
to society, needs therefore to be supplemented by h consideration, 
first, as to the extent to which free competition does, in fact, 
obtain ; and, secoi^ily, by an estimate of the importance of the 
indirect effects of 8'|)eculator’s operations ; and these latter effects 
are the more difficult to estimate for the reason that their import- 
ance cannot be examined tiuoretically by any (^-onsideration of 
the marginal equilibrium of cost and utility in conditions of free 
exchange, but are questions of fact which can be answered only 
from direct observation. ^ 

One of the most prominent indirect effects of speculation is 


the instability which its practice Jlntroduces into living ; it destroys 
that relation between “conduct and consequence” which is the 
basis of rational action. No attempt can be made to measure 
these effects ; even if it were posoible, the moral evil which they 
involve would remain largely a matter of opinion. It is perhaps 
reasonable to consider them set off by the pleasuies of speculation,"* 
an influence scarcely less measurable, but evidentl}^ of great 
importance in lowering the costs of the market. 

We may therefore neglect ^hese indefinite effects and pass 
to consider tlie nature and importance of the speculator's influence ' 
upon the price of securities. 

It happens that the co„iditii)ns in many markets — in particular 
where, as in the market for wheat, the voliUije of coin?iK)dity is 
vd)ry great — pr vent the speculator froin profiting by any attempt 
to controf futur'' prices, and limit his gains to those ootained upon 
operations whicTi, if intelligently directed, have the effect of 
smoothing price changes due to the natural cotirse of events. But , 
th^ opinion thiit the total effects of the speculator’s operations in 
sucli conditions show a balance of advantage to society cannoti be 
extended to the Stock Exchange without taking account of the 
very considerable differences between the two markets. 

Securities differ from produce in several important respects. 
4^irst, a group of stocks and shares is not homogeneous, like inter- 
changeable grades of wheat ; the quantity of any issue i^ often 
comparatively small, a condition which gives greater scope for 
manipulation, and, by increasing the risks of •short selling, 
diminishes its corrective influence. Secondly, while the value of 
©ach is subject to 'variations arising from both general and par- 
•ticular causes, in the case of the latter not only intelligence, but 
also control, is in a great measure lodged with interested parties. 
Pinallj^, the inconje from securities is often far less definite and 
certain than that from produce* they are held in vast quantities 
by a flu'blic very imperfectly informed, and therefore highly 
subqeptihle to suggestion ; that is to say, the public demand curve 
for securities is not independent of price, but may be influenced 
by its fluctuations. 

The high importance of establishing prices conforming to a 
normal level is derived from the function of price in regulating 
production and consumption ; that is, in effecting a more perfect 
adaptation of supply and in facilitating that distribution ot the 
output which maximises its utility. The adjustment of resources 
in produc^ioil is governed not by momentary prices but rather by 
an average nrice over a period whicji varies with the conditions 




of production of each commodity, and this effective period is likely 
to be much shorter in the case of securities than in produce. Mr. 
Emery maintains that in the wheat market improved prices may 
have some good influence on the regulation of supply ; but if we 
compare the effect on the output of wheat of a few months of 
’"high wheat prices with the influence of corrpponding period 
of inflated prices upon the production of oil shares, it becomes 
evident that the influence of speculation is likely to be far greater 
in the latter than in ^ the former case. Moreover, not only is the 
magnitude of the speculative effect likely to be greater in securities 
than produce, but its importance will also be greater. Company 
directors place a high value upon their “credit/’ that is, upon 
their power to increase their issues in cases of great opportunity or 
emergency, and this power being bound up with the relatke 
stability of the market quotation for its shares, the de'nand for 
stability is an urgent one. < 

Corresponding tg the effect of improved prices in controlling 
the consumption of wheat and increasing its utility to the con- 
sumer is the effgct of a closer approximation to investment values 
in increasing the value of securities. This closer approximation 
cannot, of course, increase the money' yield of stocks and shares, 
but by narrowing the limits within which capital values fluctuate, 
and by giving greater knowledge of their futui'e yield, it increaseij 
their utility by reducing the Uncertainty of the investor. 

It IS not, of course, possible to arrive at any very definite 
opinion from general reasoning of this kind, but it appears fairly 
clear that on the Stock Exchange, as contrasted with the j)rodu^‘^ 
market, accurate prices are far more important in regulating 
production, and not less important in the distribution of supply. 

In passing to consider the general conditions whi6h determine 
the actual influence exercised by the speculator on market values, 
the differences between the two markets are seen to become more 
prominent. . ^ « 

It has already been stated that the public interest in speculative 
transact? >ns requires that they should be based on a Imowledge 
of what future prices should be, while the speculator is concerned 
only that they should be based on a knowledge of what future 
prices actually will obtain. The degree of Coincidence between 
these twq interests depend mainly upon t^e volume of commodity 
present in the speculative mai^ket and susceptibility of the public 
to the suggestion of changing prices. 

When the volume of commodity is as vast as that^in the wheat 
market, th§ possibility of manipulation is reduced to a rninimum ; 


a corner in wheat is, according to Mr. Emery, a thing of the past. 
But there is a further advantage in mere quantity ; it enables the 
bears to reduce the bale nee of optimism in the market, thereby 
tempering t.|ie rapidity of a decline in values much as the action 
of bulls anticipates a rise. 

It is evident that in this respect the conditions on the Stock” 
Exchange ^ire in general far less favourable to the establishment 
of improved prices. Sir Eobert Oiffen draws attention to the very 
great importance of the presence of a volume of capital 

speculatively directed, which unwen readily from one sound 
security to another, rnaintair'ing iheir values against fluctuations 
in opinion unjustified by n' tnal conditions. No doubt this service 
is of very great value, but it needs to be balanced against the 
speculative influence on the less reimtable securities. Looking at 
the recenrt oil and rubber booms, typical of many oilers, it seems 
doubtful whether the sf>ecnlative piice has on the balance^ any 
positive value in regulating the price of such securities. The 
8i>%3iiIator’s influence in distorting price need not be due to 
unaided manipulation; indeed, it is said by Mr. Hartley Withers 
that deliberate manipulation by powerful interests is of little 
importance in the London Inarket, and this opinion is confirmed 
by that of business^men. The evil appears to arise to a far more 
important extent from the continuous qualitative changes in many 
securities* and* the consequent extreme difficulty in estimating 
their value. As a result of this apy change of price originated 
l>erhaps by professional speculators, re-acts upon public opinion 
a^pd produces an unreasoning speculative activity which results 
not in correcting, but actually in reinforcing, that change. 

* While general reasoning goes to show that speculative opera- 
tions are far 'less likely to result in improved prices on the Stock 
Exchange than in the great produee*markets, it cannot yield any 
very d^ifinite results. If, however, one contrasts the hypothetical 
ruarket formed by investors only with the actual Stock Exchange 
containing speculators of every shade of skill and experience, 
and if he reflects further that the trust companies alone direct the 
speculative investment of some seventy millions of pounds with 
a judgment far superior to that attainable by the investing public, 
it seems impossible to 'doubt that while in particular cases prices 
may be distorted, yet t|jfe influence upon price of the body of 
speculators, takei? as a whole, yields a considerable net advantage 
to society. The beneficial effect on price may be less than in the 
great produce markets, but there will still be a balance of good. 

Eealistic inquiry is equally necessary in dealing with the 
No. 89.— /oL. XXIII. 




question of the efficiency of competition in beating down the 
speculator’s profits to a normal lef el ; ^but some general observa- 
tions ^ay be made. The essential condition for effective com- 
petition in speculative operations is that of equal access to the 
sources of intelligence by |>ersons of similar ability. Superior 
itfeitural ability in a speculator is similar in its social effects to 
the possession of monopolised information which it has cost 
nothing to produce ; its utilisation increases the aggregate wealth 
of the community, but gives opportunity to its possessor to spoil 
the public. It has already bean argued that while the changing 
values of produce depend on general influences, intelligence of 
which is unrestricted, the values of securities vary also from par- 
ticular causes of which knowledge and control are in some measures 
confined to a limited number of interested parties. This imperfect 
access to the sources of information, especially notable in ^he case 
of joint stock companies, must greatly limit the efficiency of enm- 
^petition, thereby allowing the individual, to exceed the social, net 
product. No doubt monopolised information cannot long be 
withheld from a vigilant market ; it is published by the very 
operations in which it becomes effective, but it may b(. concealed 
from the general public for a sufficient time to allow of abnormal 
gains to its possessors. Without enumerating^ the parties — the 
company director, the auditor, and a host of otljers~-in a position , 
of differential advantage, it may perhaps be token as established 
that in certain groups of securities competition acts very imjx^r- 
fectly in reducing the gain to be derwed from exclusive know- 
ledge to the value of its social productivity. To the extent 
therefore, that the speculator is in possession of superior ability or 
mono|X)lised information, his social justification is weakened, and 
hi^storical prejudice against his 9 perations is correspondingly 
vindicated. * 

When one turns to consider unorganised markets like th6se in 
land, it is easy to see that very imperfect competition may of-lcK 
result in the condition that the direct service of the syieculator is 
enormously Overpaid, and when there is added to this the con- 
sideration that the indirect effect of hi^ Operations is quite likely 
to be socially injurious, it becomes evident that the total effect 
of his activities may involve a very considerable loss to the 
community. ^ 

Summary , — The argument directed to determine the social 
service of the speculatoi ,on the Stock Exchange is somewhat 
elaborate and at present incomplete. It has tended to show that 
the a priori justification which attaches to the direct service of pro- 


duction processes in general, for .the reason that itst payment is 
derived from, and confined witlSn, the social value of its out-put, 
holds for that of the si eculator, but only in thf^ presence of com- 
petition sufficiently free to elicunate from his superior intelligence, 
any value other than that derived from its social productivity . In 
fact, however, this competition being im})erfect^. opportunity is 
given for abnormal profits, and cons^ qucurly the investment of 
resources in speculative operations tends to be pressed beyond 
that margin adjustment at which it is socially desirable. 

The extent of this compefirion, is a question of fact which 
can be answered only by ji* txarnination of each rnarkot, or, 
indeed, of each set of tr; -nsactions. The presence of completely 
free competition is a guarantee that resources aie invested in the 
rq^uction ard I'^caring of Uncertainty up to that margin which is 
socially iesirahle, and thereiore that the direct s^rvicje of the 
speculator >ielcl%a net social gam. But as comix?tition declines 
in efficiency the existence of this gain becomes less and less 
pr<^ablc, and m such unorganised markets as those in land it is 
likely that there is a very considerable misapplication of resources, 
and therefore a large social w^aste. The indirect effects of the 
speculator’s operations being unrelated to any social payment 
need to be separately estimated. It was argued that while price 
regulation was of greater importance on the Stock Exchange than 
in the produce* markets, speculative influence was less likely to 
establish accurate prices in the former than in the latter rnarket, 
and that no argument as to the total effects of speculation could 
hg extended from one to the other. The question whether or npt 
speculative regulation of price shows a net gain to society is again 
^ question of fact td be separately determined for each market ; 
it turns upon ’such conditions as the volume of commodity and the 
^.ent to which knowledge of the fukiire is possible. 

In the particuli^ case of the ^tock Exchange it appears to be 
highly likely that competition is sufficiently free to ensure a con- 
siderable-net social gain from the direct service of the speculator, 
and while no opinion can be expressed as to the importance of 
the pleasures and the moral evils of speculation, it appears to l)e 
pilmost certain that the remaining indirect effect — that on price— 
yields a gain to the community, and, no payment being made for 
this gain, it forms a ngt addition to the contribution of the 
speculator to the •efficiency of the market. 

Finally these results may be translated into the terms 
employed in beginning of this paper. 

The in<!hntive^to the speculator is derived from the profit to 

p. 2 


be drawn from the transport, of goods between two prices 
separated by an interval of time ;*liiR .direct product is therefore 
the increased utility which this act adds to the goods carried. 
This utility appears on the Stock Exchange as an increased 
exchangea^bility of securities which facilitates the continuous re- 
distribution of the disutilities involved in the supply of capital, 
thereby reducing the Financial Insecurity attaching to holders of 
stocks and shares. 

•In addition to this, primary service his operations do, in fact, 
cause prices to approximate more closely to investment values ; 
they therefore yield a secondary indirect product which appears as 
a reduction in the amount of Uncertainty falling upon investors in 
general . 

Together these two services reduce the deterrents to the supply 
of capital, lower its supply price, and reduce the cost of pit^dnction 
of business undertakings. 

F. Lavington 



The Report of tbe First (%>,dsus of J rorliiction of the United 
Kingdom (1907)^ allorcl^ nn opix»rtunity of considering the 
statistics of production and of income with reference to each 
other, and with reierence to tiie economic com^eptions of produc- 
J;ion, distrihutioii, value, and income. 

In >he General Report by Mr. A. W. Flux, which precedes 
the detailed Iwbles, we find net only a desciiptive summary of 
the new statistical r(‘sultc obtained, but, also an attempt bj 
means of sueeping and bold estimates to obtain a complete 
valuation of all goods and se^’vices jKoduced or rendered in the 
United Kingdom, and a coni[)arison of this total with current 
estimates of income. In* the following summary table, which is 
re-arranged from the very involved analysis in the report, the 
only values that were obtained directly by statistical inquiry are 
those of net tiutputs, customs and excise, and excess of imports; 
the rest are estimated from rough and imperfect data. The 
merchanting and carriage of goods from the jx)rts and (in various 
stages of manufacture) from factory to factory is estimated as 
costing from 10 to 15 per cent, of the value of imported materials ; 
and tbe transporf of goods from the ports or factories to the 
retailers appears to be taken as about 'J5 per cent, of their value, 
jvhile 35 per cent, more is added for retailers’ profits and ex- 
jienSes. From oomparisou w^i^h the })o)>ulation census of 1901 , it 
supposed that about one million workers employed in small 
workshops or on their own account were omitted from the census, 
and it is suggested that their net product averages about £50 per 
person per annum. Ther increase of investments abroad is from 
Sir G. Paish’s estimate read to the Royal Statistical Society. 
The cost of maintenance of capital is based on a rough estimate 
of the value of buildijigs and plant combined with a sketchy 
inquiry as to tHfe percentage to be allowed. The remaining item, 
as to services not productive industrially, is discussed belbw. 
Though th^ estimates have so slight an apparent basis, it seems 




probable that a good deal of care has been spent in considering 
them, and wide margins of error (expressed as ± in the following 
table) are assigned in the report, so that it is believed confidently 
by the compilers that “gross inaccuracy is excluded.** 

Table I, 

Net output of industries and 


Certain raw materials pro- 
duced and used at home 
Net output of agriculture , .. 
Net output of fisiiorios 

Result of direct inquiry ... 
Estimated omissions 
Duties on home goods . . 
ISIorchauting and carriage 
before completion 
Merchanting and carriage of 

exports to ports 

Merchanting and carriage and 
retailers' : — 

of home goods 
of imports ... 
Occupation of houses, f)er. 

Ronal services, &c. 

Total of estimates and duties 


690.000. 000 


180.000. 000 


50.000. 000 

48.000. 000 

35,000,000 ± 8,000,000 

45. 000. 000± 10,000,000 

365.000. 000 ± 50, 000,000 

127.000. 000±17,000,()00 

375,000,000+ 25,000,000 


1 ,046,000,000+ 110, 000, W) 

Value of net output of gooda 
and services vroduced or 
rendered in the United 


Value at port of imports loss 

value of exports... 145.fKX),000 

Duties on imports ... .. 15,000,«XX) 

Increase in value of invest- 
ments abroad 100, Oi)^), 000 

Value of goods and services 
available for consum.ption 
or salving by tlw pciiple 
of the United Kingdom .. 

Less cost of maiiitenanct; of 
homo capital 

, N^t income of the United 

1, 945.000, 000± 110,000,000 


2, 206,000,000 ± iio,ooo,oqp 

176,000.000 + 5,000,000* 
.62,030,000,000+115,000,000 ^ 

The total thiib obtained on* the produettve side nfay be 
compared with total income as hitherto measured. 

Table II 

1907, Estimated income above income tax limit 

,, wages 

,, inlerniediate income 


740.000. 000 

325.000. 000 

Total income ... .. £1,945,000.000 

^ Of course the vai ious errors may tend to balanc^e one anoij^ber, and the probable 
error of the sum is less than the total -'•i the probable errors of the parts ; but it 
hardly seems worth wiiile to apply the theory of probability to such rough estimates, 
especially as no error is assigned to omissions or to investments. The total given 
in the report, where the items are grouped differently, in £i, 9^ 8,000,000 to 



In this table Income (above d6160) and Wages are estimated 
on the method used in The Economic Joubnal, 1904; p. 459, 
brought up to date ; while Intermediate Income, that received 
as small salaries or profits, or small pensioi^, interests, &c., is 
estimated from the Eeport^ on Incomes to the British Associa- 
tion, printed In the Statistical Journal, December, 1910, modified 
for application to 1907. If we may suppose that the various 
statements ir Table I. wf re not intiuenced by knowledge of 
aggregate income as generally estimated, the agreement is very 
remarkable, for no one can hope get sucli a total correct within 
5 per cent. It certainly apj>earfi that ** gross inaccuracy is ex- 
cluded*' so far as the lOial is concerned, if we may regard an 
error of 5 per cent, jus venial. 

The total inay be ( xhibiW in another form : — 



Gross outi)Ut agriculture, mining, 
and industry, including raw mate- 
rial, home or imported, and ox- £ 

eluding dn plica cion 1,360,000,000 

Carriage, morchanting and retailing 

connected with home goods ... 442,000,000 

Duties on homo goods 48,000,000 

Value of goods produced finished at 
}iome when delivered to customer 

or on ship ... * 1,850,000,000 

orts ready for consumption ... 220,000,000 

Duties (VI, transport and retailing of, 

such import 140,000,000 


Total for consumption or export 2,210,000,000 

Subtract exports 465,(JOO,000 

Total goods for home consumption or saving.,, £ 1,745, 000, 000 ±80,000,000® 


Net output, as used in Table T., “expresses completely and 
without reduplication the tdtai [jmoimt by which the value (at 
*^woEks) of the products of . . . the group, taken as a whole, ex- 
^^ceeded the cost (at works)* of the materials purchased from 
outside.” Gross output in Table III. includes the value of raw 
materials*, and of goods imported and manufactured or finished 
at home ; but goods parsing through more than one factory are 
only counted once. The value of material goods ready for use was 
then £1,745,000,000. 

,Tt was found possible to separate capital goods, “such as, by 

^ Before this report (September, 1910) intermediate income had been estimatied 
by me at £100,000,000 loss. 

® Then the former total, £2,030,000,000, is thus obtained : — subtract £176,000,000 
as above also £16,000,000 imports for maintenance of capital or stock, add 
£100,000,000 ijj^vosted abroad, and £376,000,000 houses, services, &o. 




their nature, must be employed in making or repairing machinery, 
plant, or buildings,” from consumption goods “such as are 
adapted for the personal use of consumers ” both in the Census 
of Production and in the Imports. The value of capital goods so 
found, with an estimate for transport, is added to the (net) value 
^of new buildings and other works of construction, maintenance or 
repair, as shown in the Census, and the total *^£365 ,000,000 is 
obtained. Of this about one-half is allotted to the maintenance of 
capital values in their condition, and the other half remains for 
re-investment. A further rj^lativcly small sum of imports, 
£*65,000,000, is regarded as maintaining or increasing the value 
of personal goods (furniture, jewellery, (!tc.), say £15,000,000 for 
maintenance and .1*50,000,000 for increase. 

We jiiay then conijule the following tables : — 

Table *^IV. 

Material goods for personal consumption 

Capital goods, for maintenance of plant, &c. 

,, ,, ,, ,, consumer’s stock 

„ ,, ,, investment 

Increase of consumers’ stock 



176.000. 000 

180.000. 000 

Total as in Table III. . 


and finally, 

T\ble y. 

Personal oonsumpti on — M aterial gooiis 

,, ,, Services and iicust h 

Material and immaterial gcjds usdl 

Additions to capital and stock at. lioipc 
,, investments abroad . . 


1.325, 000, fKX) 
Oj 5,000,000 

230, 000 (K)0 
100, 000, (‘>00 


330,000,000 J 

Total income 2,030,000,0(X) 

The tables now given arise directly from the estimates in 
Mr. Flux’s report, with alterations in arrangement and wording. 
It is not proposed lo criticise here ‘the individual figures. What- 
ever alteration might be made in detail if fuller informntioh were 
available, it is not likely that the general relations of the parts 
would be much affected. 

“Everything that is jiroduced in the course of a year, every 
service rendered, every fresh utility brought about, is a part of 
the national income. We must be careful not to count the same 
thing twice.” Very great care has been^taken ip the (Census of 

^ Cf Professor Pigou, Wealth and Welfare ^ p. 364. “ . . . . Mr. Bowley’s 

estimate, that one-sixth or one-seventh of the national dividend is converted into 
capital annually.’’ For read giLcsa. I cannot find now wheraj^ublished it. 

2 Marshall, Principles. ^ 



Production not to duplicate entries. The governing method was to 
reckon the net output of unit, b3' subtracting the value of all 
things delivered to the unit from that of all things delivered by it. 
In the case of industry, allowa’^ce is finally made for the mainten- 
ance of capital ; in agriculture it had to be assumed that the condi- 
tion of the soil ^was on the whole the same at the end as at the^ 
beginning. In the case of mines and quarries, no allowance is 
made for depletion of value ; royalties are thus treated as income. 
In those cases such as the postal service, .shipbuilding in dock- 
yards, and other undertakings 1 y the central or local governments, 
the product is valued, in one category or another, at the net cost 
of production ; thus, if profits are made they are nowhere included 
as income, and, if there is no question of profits, it is assumed 
tjiat there is no excess of value of the finished product over the 
cost. Thus o substaiitial part of the national income is ignored. 

No serious Hbttempt is made, or can be made, to separate goods 
from services. In Table I. we pass from the net output of^ 
material goods to a composite item including transport and 
merchants’ services, and then to dirked services of persons and 
direct services of capital, such as house accommodation. We 
are left with the familftir difficulties that furniture provides 
satisfaction of the same nature as houses, and that there is no 
line that separates paid from unpaid domestic services. In any 
case, tHe totail value of production, like the total income, is a 
matter of arbitrary delimitation. . 

Some people attach im])ortance to the aggregate of material 
goods ready for consumption that are available for a nation. They 
will find it very difficult to obtain any estimate from the report, 
even if they can filime a definition. The material goods for per- 
sonal consumption of Table f-tl,325,()0(),000) arc called in the 
^port “ goods and services consumed or exchanged for services by 
classes engaged ia production jjnd distribution,” and are intended reckoned at the prices paid by the consumer as they reach 
his hands. The next item, abbreviated into “services and houses,” 
.^375,OOO,O0O (“goods consumed or exchanged for services by 
classes engaged in supplying services” in the Report), is com- 
posed of several roughly estimated items : (i) Income from owner- 
ship of buildings not used for production, assumed to be the value 
of the services rendered; (ii) railway and tramway revenue from 
passenger service, less value of coal consumed and destruction of 
capital goods, and less receipts from commercial travellers; this 
is assiune^o equal the value of services rendered to non-business 
travellers ; ii^-ftivolves the distinction between travelling on 




business and of necessity or on pleasure, and assumes that the 
value of a railway ticket is equal to J;he price paid for it ; (hi) the 
part of postal 'service which is not for business ; (iv) the services 
of domestic servants, taken as equal in value to the aggregate of 
wages and the value of board and lodging ; (v) the services of the 
central and local government, so far as not already reckoned in 
production, whether as duties or as goods produced by the govern- 
ments ; (vi) the services of the ])rofessional and artistic classes 
and of the business, groups not already reckoned in (v) or in the 
Census ; (vii) some other pewsoiis rendering direct service. 

Two points arise out of this category : first, that there is no 
universal means of valuing services rendered in production apart 
from services renden‘d directly ; second , that such services can 
only be valued by estimating the income of those performing th^,m, 
vjhile material goods and a great part of transport services can 
be valued by their selling price in the open market. The distinc- 
tion, if there be one, between the value on the productive side 
and the income of occupied persons on the receipt side, can fnly 
be preserved over an undefined part of national income.* In 
fact, we get only a very [)artially new estimate of national income 
from the Census. The “net prodiicf ” is exhausted (after main- 
tenance of capital) by rents, interests, profits^ salaries and wages, 
and these all appear or are estimated jn income tax returns, “inter- 
mediate “ income and wages. 

Unfortunately, the Report <!'*os not provide material for 
checking any of the former estimates ( f income, owing to the 
classification by industries as a whole, vvhicb is necessarily 
adopted. Thus, the agricadtural ioU'J Vv'mjd only enable us to 
get at the unknown total of farmer s piolitS,^ if we could isolate 
agricultural rent and interest and wages by other reckonings, and 
the estimates are so hazardous as to make the remainder doubtful 
to a prohibitory degree ; and oth^r cases are similar. « 

It w^il) have bt>en noticed that duties are included in the vj^liie 
of goods io the consumers, and therefore as part of the national 
income, while the governmental services for which the duties pay 
are not included. Now a man receiving a professional income of 
£500 in return for services, may pay £15 in direct taxation, 
corresponding to £15 worth of governmental services, and have 
so much less with which to jmrehase q^her services ; whereas, if 
he spent £10 on spirits and tobacco, he receifes the £10 worth 
of gpods himself, and also pays for (say) £7 worth of government 

^ Practically farmers’ incomes are onlyineluded in the jjicoA«*tax net assess- 
ments if their rents are over £480, and they are then assumed toSjg one- third of rent 



services, as when a purchaser J)uys a pound of tea and receives 
a handsome picture into the bargain. This specious argument, 
that in indirect taxation you get government services for nothing, 
has, I think, not been noticed by Tariif Eeformers ! 

In the method of the Eeport the government services paid 
for by indirect taxation are not counted as of any further value. 
This seems an unnecessarily complicated method ; it would have 
been simpler to leave out the addition to net product, and value 
the services in full, liut perhaps the writer wished to force 
readers to consider interesting problems relating to consumers’ 
surplus. G».x)ds in general are worth to all hut the marginal pur- 
chasers more than they oay i‘(»r them. 

In the case ol.' gv^ocLs whose price is raised by taxation, so much 
i» cut off from the C(ins!niiers’ surplus and so much is spent on 
public 8€%vi(*e.] ; the report assumes that the value of the services 
equals the an ’hint of taxation, hut of course it does not follow 
that this value equals the de^triment to the consumer. In the^^ 
cSse of direct taxation the taxed individual is the poorer by pre- 
cisely the amount of the tax. Hence, whatever way w'e make our 
measurements, we are involved in difficult questions of theory 
and practice. The difficulty originally arises from the fact that 
value ill exchange", which affords the only possible method of 
iValuii>gj)roduction, depends on other factors as well as on the cost 
of production.^ 

A shifting of taxation from diret^t collection to indirect would 
involve (by the method adopted) , if the prices rose,, an increase in 
the value of goods and a decrease in the value of services; but 
official services are equally valuable whether paid for by duties 
or from income tax, and we can only harmonise the calculation 
by supposing that lost c^msurpers’ surplus is turned into official 
„fi^vices behind the back of the adcountant. But wffien part of 
the incidence of, ftixation is on. the manufacturer (and, of course, 
ixi the*case of monopoly a great part of it may be), the net product 
of manufacture,, as valued, would fall to the extent of part of the 
yield of the duty. Taking the extreme case where the manu- 
facturer paid the whole of the duty and did not raise the price of 
his goods it appears that the corres^xinding amount of official 
services w^ould completely disappear from the aggregate income, 
whereas in fact there would only be a transference of outgoings 
to the government from the income-tax payer to the manufac- 

^ So that, e.g. the first and sixth items in Table I. become £680,000,000 and 
£58,000,000 ijirtead of £690,000,000 ja»d'£48,000,000. Then the eleventh item would 
be reduced from>^76,000,000 to ^365,000,000 by the subtraction of an additional 
£10,000, OA) from item (v, ), p. 68. 




iarer. On the other hand, in the same case the net assessments 
to income tax would be reduced, since the manufacturer is only 
assessed on his profits, and Table ]1. and Table I. would remain 
comparable. It appears, then, that the aggregate national income 
may depend on the method of taxation, by wdiatever method the 
aggregate is estimated, oven if we suppose that taxation has no 
effect on the amount of various classes of goods produced. The 
more successfully taxation is transferred to monopolists, the less 
the apparent incon^e. 

These, and other considerations not arising from the re|)oft 
(such as the dilference of marginal utility of money to persons of 
various incomes, and the continual changes in purchasing power 
of money), tend to show that Aggregate Income, however 
measured, is of tlio nature of a numericariotal, whose cont^ts 
depends on arbitrary definition, and has no very closeeTelation to 
welfare. Nevertheless, as is generally the cas:: with statistical 
totals, it can be for observing changes so great as to render 
unimportant the probably minor changes in the nature oL its 
content, or changes over a short j)eri()d when there is strong 
reason to believe that “other things*’ are not only “supposed 
equal” but are, in fact, nearly “equjfl.” 

Apart from the analysis of tlie National Dividend the results 
of the Census are mainly of statisti(*.al, rather than pure economic, 
interest. Summary excel pis from rhe tables ace to giv(' 

rise to misleading ideas, j’hiis, one !S tempted to say that the 
net output per wage-earner enqdoyed m niiiung an»l industry was 
i'lK), that (from rdhci' data) .innue] average earnings per wage- 
earner (man, woman and child) was irobaldy about £50, and that 
consequently about £60 is pDduced ptr wa!ge-earner beyond his 
w^ages ; wdiile in agriculture the net output per ].>erson occupicnl 
(including farmers) was l'83«iii Great Britain, where the average 
wage w^as ])eri.uj/r, £45. But these figures are^subject to so many 
qiialifica.tions as to b(5 nearly valueless. The net output has to 
provide for salaries, depreciation of capital, and weai and tear of 
machinery, interest and advertising, as w^ell as rents, profits, 
earnings of working em])l<)yers, and w^ages, and all these factors 
differ enormously from industry to industry. In some cases the 
wage-earner receives the great part of the value of the output, in 
other cases less than a quarter. The detailed figures are, on the 
other hand, very useful, for it is [wissible to teVl within limits in 
the case of separate industries, what is tlie pr()|>ortion of w'ages 
to the value of net or gross output. Thus, in the cotton industry 
about 73 per cent, of the gross output or selling wqjue of the goods 


goes for materials (including coal), about 17 per cent, to wages, 
and about 10 p^er cent, to tl\e otfier factors just enumerated; or, 
put otherwise, the wage-earners receive 68 i>er cent, of the net 
output. This suggests that afte’- depreciation is niet, and adver- 
tising, selling expenses and salaries are paid, there is no great 
margin for increase of w\ages at the expense of profit. 

Other very useful lines of analysis arising irorn the figures 
concern the relative im|)oitance of different industries as sources 
of production, and of the relation of home production to imported 
raw materials and imported mam fawured goods; hut here, again, 
so much depends on classifies; ion, and there is such enormous 
variety, that summary quotation is useiess. 

A. L. Bowlbw 


Wealth and* Welfare, By A. C. Pioou, Professor of Political 

Economy in the University of Cambridge* (London : 

Macmillan and Go. 1912.) 

Obiginality has sot its unmistakable mark on Professor Pigoij’s 
work. But this distinction is not inconsistent with some resem- 
blance to great predecessors. The author apj>eaiii? to have drawn 
inspiration from two. very high authorities on wealth and welfare. 
The good which philanthropy and statesmanship should seekutiO 
realise is detined by him in accordance with Sidgwick’s utilitarian 
philosophy ; to investigate tlic means conducive to that end he 
employs the methods perfected by Dr. •Marshall. Like Sidgwick, 
Professor Pigou is not o].)en to the imputation otmaterialism which 
is sometimes brought against ecoiuuriists. Ho lays dcwvn ^wo 
propositions : first, that welfare includes stj^es of conscu^risness 
only, and not material things gr coiulitions ; secondly, that wellare 
can be brought under the category n! greaier and less*’ {Wealth 
and Welfare, p. 1). These projjositions (wirn their context) do 
not postulate a psychology (like tl al of J. R. Mill) specially 
favourable to utilitarianism ; but they d(‘ i)oStulate the absence 
of a metaphysic (like that of T. Green) which derfies practical 
significance to a conception* such as '‘aggregate w^elfare ” ^or ^ 
“satisfaction.” Much of our ^ author’s philosophy rt)calls 
Sidgwick’s utilitarianism. For example, the follov/ingt senti- 
ment is not often met with outside the pages of Sidgwdek : “If 
the life of an average workman contains, on the whole, more 
satisfaction than dissatisfaction, an increase in numbers, even 
though it leave economic welfare per head the same, involves an 
addition to economic welfare in the aggregate” {loc, eit, ]>, 29). 
Like Sidgwick, Professor Pigon is prepured to admit that, in 
Sidgwick’s phrase iPolitics, p. 5S3), “One persoli may be more 
capable of happiness thim another.” According to Professor 
Pigou, “We may sometimes be able to say that the m^re cultured 
Class A, hciis a keener eirppreciation of, and derivej^mofe satisfac- 



tion from, practically all objects than the less cultured Class B 
does” (p. 48). On the assumptiotj , however, of similarity of tem- 
perament (p. 25), we may conclude with Sidgwick that the more 
equal distribution of wealth tends to increase welfare. To diminish 
inequalities in the distribution oi the national dividend (among 
the members of the nation) is accordingly one of the^modes of 
welfare of which Professor Pigou investigates tliC conditions in 
one Part of his treatise. To diminish inequality of dititribution 
in time is the proximate end to which another Part is directed. 
Much the longest of the separate Parts is directed to the increase 
of the national dividend. In investigating causes conducive to 
these proximate ends Proh'sisor Pigou biings to bear a mass of 
facts and a power of reasoning which in their combination find 
a parallel only in the Principles of Economics . 

The in^luct^ve element of the treatise, being necessarily 
diffused, cannot **tasi1y be exhibited liere. We have not space to 
exemplify our author’s frequent citations of .relevant evidence. 
Oun readers must take on trust our impression that the verifica- 
tion of general leasoning by s])ecific experience has been ade- 
quately performed, especially with regard to British labour and 
charity. Professor Pigou seems to have fully ulilised the informa- 
tion obtainable from official reports and contemporary economic 
literaturs. He is awwe, of coarse, that facts are often not 
apposite. • What he says about one of the methods of increasing 
national income which he investigates — Purchasers’ Associations 
— is probably of wide application : “No great w^eight can reason- 
ably be attached to historical examples, and we are driven forward 
to an analytical study ” (p. 239). 

* Of the numerous* valuable contributions to economic theory 
which are presented in this treatise, the most brilliant, no doubt, 
are those which assume the form of mathematical reasoning, 
feut^^ •considerable* degree of practical imjx)rtance attaches to 
other arguments which take the classical form of deduction from 
psychological generalisations. Of this simple type is the argu- 
ment directed against the popular reasoning that if a person is 
enabled, by a subsidy, to •wwk for less, he will therefore be 
willing to work for less (p. 348). The experience of the old 
Poor Law is not so conclusive as is commonly supposed : the 
subsidised workmen did i|ot acce})t a wage lower than the w^orth 
of their work to their employers ; rather the worth of their work 
was very small, owing to the system of differential relief (p. 349). 
Of the same simple type are some deductions concerning the 
consequences'^of ..transferring resources from the rich to the poor ; 




a Bice distinction being drawn between the fact and the expecta- 
tion of such transferences. It niakes a great difference wliether 
the transference is voluntary or coercive ; the expectation of the 
ferm^r leads to a diminution of the national dividend, while the 
new motive implied in the latter tends to an increase of waiting 
and effort, ^and so of the dividend (p. 365). Again, the expecta- 
tion of taxation to be levied at some future lime will have a 
smaller restrictive influence on investment than an annual levy 
(p. 375). The influence will be particularly small when the tax 
is postponed till the inveatous death. This consideration is to 
be set against, and may overbear, another presumption from 
which ‘*it follows mathematically that, in general, the death- 
duty method [of taxation] is likely to trench on capital some- 
what more than the income-tax method ” ('p. 353). , r. 

In the last proposition we have j)aRsed from simply psycho- 
logical deductions to such as involve some tinoture of mathe- 
matical reasoning, J)ut not more than is generally presupposed 
in modern economic treatises. Even so classical an econon>ist 
as M. De Foville now employs curves of supply and demand. In 
this category we may place Professor Pigou’s theory of differential 
wage-rates, which occur when the wage payable for a particular 
kind of work performed by some men (say the more competent) 
is artificially raised above the wage payable for the same work 
performed by other men. With a mindnum of aid frorfl mathe- 
matics it is argued that artintial wage containing a differ- 
ential element is less likely to imply a real transference from the 
relatively rich as a body to the reialively poor as a body than one 
which is free from such un element, ‘ p. c35). The properties of 
the demand-curve afford im])ortant deduiJtions. The great 
elasticity of the demand for labour is used as » premiss in 
arguing the old question wrfxetlier labour-saving machinery is 
likely to be detrimental to the labouring classes. Going Ixyond 
Eicardo and J. S. Mill, Professor Pigou conclrdes tha,t if an 
invention of the (dass considered diminishes the portion of the 
dividend accruing to labour, the magnitude of the" diminution 
must be very small indeed (p. 89). And this, even on the sup- 
position — which is, of course, far from being true in general — 
that the commodity in respect of which a constructive idea has 
been discovered is not consumed at all|by the working classes. 
The same premiss employed in another argument leads to a 
conclusion of quite classical trenchancy : that ‘'generally speak- 
ing, a transference of resources from the relatively rich to the 
relatively poor, brought about by interference vjtb’the natural 





wjurse of wages at any point, k unlikely to do otherwise than 
injure the national dividend, and there\\ith in the end the real 
income of the relatively poor” (p. 343). 

We shall notice in a separate paragraph some more technical 
matters which we c-annot hope to make interesting to the general 
reader. In this^ category is probably to be placed Professor 
Pigou’s “curve of marginal supply prices.” This original con- 
struction is useful as rendering more distinct, by contrast, the 
conception of a supply-curve It is still more useful as '^ii adjunct 
to the test for maximum utilisal.on*of resources, the far-reaching 
principle iiiat the more nearl y c<^ual marginal net products in all 
uses are, the larger the dividend is likely to be. This principle, 
as applied by Prub .^sor Pigou, is one of the splendid novelties 
oqpurring in this treaUso the iuiportanee of which a reviewer 
cannot be^expv/;ted upon short notice to gauge accurately. It is 
certainly of gre*il theoretical interest. Another difficult theorem 
relates to tluj shape of demand-curves. The}' are in general 
vo^.cavey according to Professor ITgou '((). 210, and p. 402, w^here 
“convex” is doubtless a misprint for “concave”). This state- 
ment may give pause to the reader who recalls that demand- 
curves are treated as convex by one of the highest authorities on 
mathematical economics, Dupuit. His view’ is referred to in a 
former number of the Economic Journal (Vol. X., p. 287) in 
connectifln with the suggestion that in certain circumstances of 
common occurrence the locus may, be treated as a right line. 
There are thus before us three propositions : tljat, j)robably, 
the demand-curve is concave, is convex, is neither. Paradoxical 
as it sounds, all three propositions may be right. For the first 
Jwo refer to differeni; circumstances ; and when we are ignorant 
which of thf? two cases is present, the third, the intermediate 
statement, may be approx)riate. Bupuit supposes that, as the 
price’ fe lowered, mw strata of customers are reached ; and so the 
curve stretches away from the axis representing price. Professor 
Pigou must be understood to sup|X)sc that the customers are, or 
may be, trealbed as a homogeneous body. Indeed, the more exact 
statement of his doctrine is* that which he has given in an earlier 
W’ork to which he refers. “In the case of a typical individual,” 
the third differential coefficient of utility (with respect to money) 
is negative. The third cMflerential coefficient of utility makes its 
unfamiliar appearance in connection with another doctrine, 
namely, that “a diminution in the inequality of distribution, in 
the sense of a diminution of the mean square deviation from the 
mean income, probably increases satisfaction.” This follows from 

No. 89. — ^voL. xxiii. 





the expression of (aggregate) utility in ascending powers of the 
said deviations ; since the first term of the expansion is zero, the 
second negative, and “we know nothing to suggest whether the 
sum of the terms beyond the third is positive or negative ” (p. 25). 

The last proposition employs, in addition to the calculation 
of utility, the secemd mode of psychical mathematics, the calcula- 
tion of probability. The probability involved is of the kind which 
has been called “unverified^’; based on impressions w^hich are 
the record of general experience, rather than on specific statistics. 
This species of probability is largely employed by Professor 
Pigou. It is the basis of his proof that the pursuit of economic 
welfare is compatible with higher aims : “When we have ascer- 
tained the effect of any cause on economic' welfare w^e may, 
unless, of course, we have evidence to the contrary, regard this 
effect as probably equivalent in direction, tliough not in magni- 
tude, to the effect on total welfare” (p. 61). The “unverified” 
species of probability is also employed in the construction of a 
new index-number (p. 47). Again, the principle underlies ’’the 
presumi)tion that certain phenomena are independent, or, at least, 
not closely correlated. Thus, the increase in the variabilitj^ of 
real earnings in one industry mighJ I>e so correlated with the 
(undiminished) variations in other industries as to diminish the 
variability of aggregate earnings (p. Oil). So \ariations in the con- 
ditions of business might co/iceivjibl^y be comfx nsalcAl as to their 
psychological effects by mistakes in the business man’s forecasts 
(p. 454). But such correlations are not probable. For “when 
a magnitude is made up of two partt , each of which varies more 
or less independently of the other, the variability of the whoje 
is likely to be larger, the larger is the varial)ility of either part V 
(p. 454). 

The ordinory or statistical species of probability makes its 
appearance in the proposition “that the precision of an average 
is jiroportioned to the square root of the number of •terras it 
contains” (p. 141). The principle is largely employed in 
connection with the fluctuations of business and labour. This 
species of jirobability enters along with utility into the following 
theorem. Let A and B be two similar ixjrsons who have each a 
fluctuating income, or, more exactly, “a variable consumption.” 
Let the normal consumption of A be fiiuch larger than that of 
B. Then “the economic welfare of A and B jointly is increased 
by any system of transferences whicli, while leaving the average 
consumption of each unaltered, diminishes the variability of B’s 
consumption, even though this diminution take^ place at the cost 




of an increase in the variability of A’s consumption” (p. 402). It 
is similarly concluded that ‘.‘the exposiirc of ^*100 to a scheme of 
uncertainty whose rang^e is narrow, is easily seen to have a 
smaller value in the market than the exposure of this sum to a 
scheme whose ran{je is broad” (p. 100). P>at does the latter 
argument require as a premiss — what the former argument no 
doubt does — the new^ proposition above notice d regarding the third 
differential coefficient of utility ? Is not the propositioi' regard- 
ing the ^second differential which is commonly emplojed in the 
theory of insurance sufficient ? f >at it is with diffidence that 
we suggest a correction in a matter reUiling to insurance. 
For our author’s troatmcLt of that .njbject is particularly lucid 
and instructive. He arrests atlentjon by Hnnoiincing — in con- 
niption with the ad\w:ntiigos of “voluntary transfennee ” to 
which we^ha.'* referjed — a way hy v\hicli “transference can 
be made economically f)rofftable to the txansfeior.” The way is' 
simyily muiiud insurance. Those who are hirtunate and escape 
th« loss which has been insured agaii^st, may be regarded as 
relatively ric*h, making a transierenc/} to persons who have 
})ocome relatively floor (p. 3G6). It pays to undertake the risk of 
such transference, even though the adjustment between the 
premiiaris j)aid the risks carried by different mendiers is 
imperfe ;t — wdthin limits. The limits are less than ordinarily 
narrow ill the (? of wwkpeople (p. 367). 

From the extracts which we hajk^e givtm it will be gathered 
that this treatise abounds in new ideas. But i^ is .impossible by 
extracts to do justice to the author’s logical arrangement of topics 
and lucid order. 

Ordinis haoc virtue erit . . . 


IH jam nunc dicat jam nunc deblintii^ dici, Pleraque difforat. . . .” 

iTie Miter part of ihe Horatian, maxim proves a hard saying to 
many. .But our author never dilates upon the obvious, never 
diverges injo the^ iiTelevant. He goes straight on, with even 
march, as it were along a Homan road. Flowers there are by 
the roadside, but not so freqfUent or so gaudy as to distract atten- 
tion. Epigram is used only to clench argument. For example, 
as against the now fashionable doctrine that progrt^ss depends only 
on breeding, not at all oft education and economic conditions, it 
is argued that thSugh educational conditions may not influence 
offspring in the physical world, they do favour new births in the 
wwld of ideas. “Environments, in short, as well , as people 
have children” (p. 59), 

F 2 



New ideas well presented are applied to many old problems. 
Even such familiar themes as the public control of monopoly 
and the public operation of industries are enlivened by recherche 
arguments. But the new weights put into the scales of delibera- 
tion are not over-estimated. For instance, with reference to the 
waste of resources caused by cost whi(*-h hinders the movement 
of workpeople and by their mistakes in judging what is to their 
own interest; it is shown that where error of judgment exists, a 
cheapening of the cost of movement may prove socially injurious. 
The case is not merely acadefuic, but is applicable to the aimless 
wanderings and useless changes of situation which are sometimes 
occasioned by facility of movement (p. 119). “But these excep- 
tional cases are not subversive of old-established beliefs.” When 
w^e are contemplating, from a general poinL of view, the conse- 
quences of these diminutions [in cost of movement and in falsity 
of judgment], “it is not the possible, but ihc probable, effect 
that concerns us’\(p. 121). With regard to the more familiar 
considerations which Professor I^igou from time to time qipte 
properly throws into the balance, we think that he might with 
advantage have more frequently referred to standard versions of 
similar arguments. Thus, in conned ion with the failure of 
harmony between private and social interest (p. 158, and context), 
there might have been expected a rcferen (‘0 to Bidgwick’s masterly 
treatment of that subject in the thud book Of bis' Political 
Economy. Again, when J:^rofess^a tigov places among the 
ultimate effects of an artificial wage-rate the cin iiiastance “that 
the reward of employing power and waiting h\ industries in 
general being somewhat reduced these factors are likely to be 
forthcoming in somev\hat dinuaisheu quantities” (p. 313), he 
might have referred— with an expression of assent or qualifica- 
tion — to some of the leading writers w'ho have dwelt on that 

The origiiiality which we have noted with res))ect to theory 
makes itself felt in several practical suggestions. The author has, 
we believe, only one precursor in the suggestion, that it is 
possible to increase the national dividend by imposing differential 
taxes on industries governed by the law of diminishing returns 
(p. 179). Many suggestions are directed to improvements in 
distribution. Munificence might be eijiiouraged by honours and 
decorations, a new “order,” not interfering with the attractions 
of old ones. On more 1 ami liar lines Professor Pigou advocates 
a modified form of income-tax which should exempt resources 
devoted to investment in general (not to insurance only) (p. 371). 

1913] piGOx; : wealth and welfare B9 

He mentions with approbation ♦Eignano’s plan of taxing inherit- 
ances with increased severity at each successive devolution 
(p. 376). But he woula confine taxes on unearned increments to 
“windfalls’* (p. 370). He would accompany transferences from 
the rich to the poor with strict conditions (p. 392). He is in 
favour of “taking some cautious steps” towards a very drastic 
treatment of the very unfit (p. 55). Ainong plans for reducing 
fluctuations of earnings there is adduced Mr. Balfour’s sugges- 
tion that when industry is depressed, a bounty should be given 
to firms nmking for foreign orders, in such wise as to enable 
them to accept contracts. '.Vhy not to firms making for British 
orders, suggests Profescr.r Pigou (n. 481). He is “inclined to 
believe ” that a 'very considerable net benefit would residt from a 
n?cthod of sienlying prices such as tliat proposed by Professor 
Irving FiShei 488; cp. p 464). There would be available for 
the purpose the index -number proposed by Professor Pigou, in 
which the prices of commodities at one of two compared epochs 
are weighted with the quantities of the commodities consumed 
at the other epoch fp. 46). One of the most ingeniously deduced 
proposals is the one about, the value of which we are least con- 
fident. With a view to maximising the national dividend, it is 
concluded that in the regulation of railways discrimination, or 
the “value ot service” principle, should be adopted at one 
(probably brief) stage of a country’s development, and “this 
principle should give place to simple competition, or the cost 
of service principle, as soon as population has growfn and demand 
has risen sufficiently to lift it out of that stage” (p. 234). 

The last topic yitroduces our principal difference with Pro- 
"fessor Pigou^. He seems to us in his estimates of probabilities 
not always to attach sufficient ^weight to authority. For 
inskui-ce, on a question of definition, the use of the term “joint- 
cost,” more defertfnee might haTve bexm shown tow^ards Professor 
Taussig* (p. 216). We think it very improbable that an “accident 
of language” (p. 217) should have conduced to a “fallacious 
general argument” on the part of Professor Taussig (p. 219). 
The following passage brings out the matter at issue : “Principal 
Hadley and his followers, not content wuth demonstrating that 
fact [that a certain casi^ m<iy occur in practice], add, without 
argument, that this case is typical of the whole railway world, 
and suppose themselves, tlu^refore, to have proved that the value 
of service prinicple ought to be followed in the determination of 
all railway rates. Such an unargued inference is plainly illegiti- 
mate ” (p. 281). It is plainly legitimate, we think, to defer to 




the unargiied judgments of thef leading authorities on railway 
economics with respect to the question whether a certain abstract 
case may be taken as typical of the actual facts. This is just 
one of those matters which are amenable in the Aristotelian 
doctrine that we ought to attend to the unargued pronounce- 
ments of the practically wise, v;ho have acquifed by experience 
a certain pownr of mental vision. 

Here arises the question : How far do our author’s theories 
belong to the category of practical wisdom, or to that higher 
kind of science which the philosopher distinguishes as grand and 
wonderful and difficult, but not useful for human purposes? 
Mathematical economics are certainly useful to some extent ; 
but does the further elaboration which tlrat study has received 
in this treatise imply a correspondingly large, contributioil to fhe 
Art of Political Economy? The analogy of mathgmatical physics 
does not help us to answer this question : the calculus of utility 
and probability is* something so peculiar and unique. ‘*Ai 
posteri L’ardua sentenza 1 ” 

F. Y. Edgeworth 

Principlrs of Economics. Vol. II. By N. G. Pierson. Trans- 
lated from the Dutch by A. A. Woizel < London : M**.cmi]lan. 
1912. Pp. xxiii-hOlS- Price JOs. net."' * 

Economists have been looking for this second instalment of 
Mr. Wotzel’s translation of P erson lV»r some time, ten years 
having passed since the first vohin ;■ ypfujared. It is worth the 
waiting for; the .|iia]jty of tho. transhition well up 1o the high 
level of its ])rodecessor, and ii seems so free from doubtful passages 
that the last bOO pages jirobably Idse little from missing revision by 
the author. One cause of the delay was the accidental destruc- 
tion of a pari of the mamiscri|jt. The present volume covers 
production and the levemies of the State. One long chapter 
deals with the place of self-interest in productiefn. Qualifications 
of the doctrine of maximum satisfaction are brought out by an 
examination of concrete cases, for instance, the smoke nuisance 
(the total loss occasioned by which probably exceeds to an 
enormous extent the sum of the indijudual savings which are 
made by disregarding it) and the development* in railw^ay trans- 
portation for which State action has been responsible. But there 
is no attempt to distil from the facts the fundamental principles 
which may be laid down in these matters, or to measure gains and 
losses against each other — as is done, for example, by, Professor 

1913] pmBSON : pkimciI^.es of economics 71 

Pigou in his recent book. Ch short, the method of the book 
tends to be that of pre-MarsRall Economics; but, within the 
scope of his method, the author’s acuteness, independence, and 
judgment are, on the whole, beyond praise, though possibly the 
common sense has here and tnere a trace of the hardness of 
outline w^hich, for a time, made English Political Economy so 

Dr. Pierson’c bias — not pr mounced — is to justifj the ways 
of trade. Thus: “Like a bodily pain (tiade depression) serves 
as a useful warning ; it does m^-re * it gives a powerful incentive 
to do what is urgently needed to be dont.. We might even go 
further and say that, Inunan nature being prone to sluggish- 
ness, depressions provide the stimulant without which there 
\VouId be no progress.” But the description of depressions and 
crises is f^honoighly done, though the problem of the periodicity 
of the forrnem is hardly approached. The same closeness of 
observation and absence of the refinements of theoretical analysis 
i^iarix the treatment of trade unions, about, wliich the author is not 
afraid to speni; his mind. He inclines to think that “the power of 
capital” needs “the presence of some other power to hold it in 
check, and to inspire fea» where the sense of duty or humanity 
is lacking,” and .allows that trade unions “possibly enable a 
working-class population, which has already risen above the 
ordinal^ levePof welfare and enlightenment, to rise still further,” 
However, those whp expect from Dr. Pierson’s belief that trade 
unions “can never be the means of raising a working-class 
population which still occupies a very low level,” ahd his qualifica- 
tions of the doctrine of maximum satisfaction, that he must fall 
into the arms of the more moderate socialists, will find them- 
selves disappointed. “When we sound the depths of their (the 
socialists’) philosophy, we ^oon^ touch the bottom. Lassalle 
pcitfr^rms the most astounding feats in logic . . . the ccouomic 
wisJoqi of Fliirscheim is belo^ the lowest conceivable level. . . . 
(Marx’s) errors are such as make it difficult for us to accept him 
as a strictly scifintific thinker. Let us not look for science among 
these men, but rather foj’ expressions of feeling. . . . Till now 
the strength of the Socialists has lain solely in their criticism. 
By that criticism, even though it be exaggerated, we must 
endeavour to benefit, far as constructive theory is concerned, 
nothing of any#/alue has yet been contributed by Socialists.” On 
the subject of population, Malthus is closely followed; P. Leroy 
Beaulieu’s alleged law, to the effect that the rate of increase falls 
as civilisation advances, is attacked ; and neo-Malthusianism is 




outspokenly discussed. To Protectionism Dr. Pierson is by no 
means favourably disposed, as he makes plain in the course of 
a vigorous discussion extending over nearly 100 pages, in which, 
however, there seems to be nothing strikingly novel. The land 
question in its relation to production is comprehensively and 
judiciously treated. On questions like this Dr. ^Pierson is at his 
best ; as he is also (as one would expect from a Finance Minister 
of his speculative bent of mind) on topics of Public Finance. It 
is notable, however, that the modern demand for Progressive 
Taxation, beyond what is neeTded “to provide an easy transition 
from total exemption to full taxation,” is regarded as indefensible. 
Taken as a whole, Dr. Pierson’s work is leisurely and spacious, 
and treats of society in masses after the grand manner of the old 
school, which, it is to be hoped, will never expire. * 

S. J. Chapman 

Political Economy , ' By S. J, (’hapman. (Home University 
Library of Modern Knowledge.) (London : Williams and 
Norgate. 1912. hs.) 

“The explanations that will be jVesented arc those which 
became current after the exa(*t analysis vbegnn by Ji^vons and 
L&m Walras had been ])Ojrect(‘d and ap]>licd to the wdiole field 
of economic j)henomeiia by later writers, particularly by Dr. 
Marshall, Though the new .generalisations were suggested at 
many points by mathematics, it is perfectly easy to represent 
them in simple InngiPigc whi'-b implies no mathematical know- 
ledge ; and 1 sliall try in do so” (i)p. L 8). 

If tlie implications of the first of these two sentences, and 
the statement eai))r»died in the se(;ond, are accepted, 'criticism of 
Professor (diaprnan's i>ook resf)lves itself into unqualified admjjra-^ 
tion of tlie judgruent, skill, and subtlety which it displays. 

But neither the implications nor the assertions seem "to the 
present reviewer to be above challenge. To begin, with the latter, 
which can be more briefly dealt with than the former. On p. 75 
we read, “ihe price of a commodity ^dll be tlie price at which 
equal quantities are demanded and supplied, provided that a 
slight addition to the supply would mean a supply price above 
the demand price, and a slight rednctir^i of the supply would 
mean a supply r>rice below Ihe demand price. There may be, but 
there is not likely to be, more than one such price. It is only 
possible when increasing returns rules, and if it does, is least 
likely when demand is highly inelastic.” If the reader who has 


never seen or constructed a figr^e in which the (so-called) supply 
curve cuts the demand curve in three places, twice from below 
and once from above, imderstands the significance of the proviso 
contained in the above extract, and also perceives that a point of 
the unstable equilibrium, which that proviso excludes, must come 
between the twcv points of stable equilibrium which it allows to 
pass, Professoi Chapman may call him as a witness in suiiport of 
his assertion that it is “perfectly easy” to represent such con- 
ceptions effectively in non-mathematical langiiage. Fiat experi- 
mentum. 1 would not for the x.orld prejudge it. 

The implications of the sentence quoted above need more 
lengthened consideration As interpreted by Professor Chap- 
man’s work, at any rate, they involve an approval of Pr. 
Marshall’s deliberate (and very chivalrous*) method of minimising 
and disguising to the utmost extent possible the revolutionary 
character of Tee ne\/ methods of which he is so eminent an 
expf)nent. This attempt to preserve as much as possible of the 
oW terminology, and the traditional divis'ons and contrasts, in the 
face of the new principles, and to shew how much substantial 
truth the admittedly imperfect statements of earlier writers con- 
tained is one of the leading characteristics of Dr. Marshall’s 
work ; and it stands in marked contrast with the somewhat 
tpiculent announcement made by Jevons to his brother, “In the 
last few months I liave, fortunately, struck out what I have no 
doubt is the true Theory of Economy, so thorough-going and con- 
sistent, that I cannot now read other books on the subject M'ithout 
indignation.” To find fault with Professor Chapman's handbook 
involves something very like a contention that, of the two, 
•Jevons’s' indignatiori is likely to inspire a more fruitful treatment 
than Dr. Marshall’s reverence k 

And, indeed, the truth is that Professor Chapman constantly 
enunciates trencha^it generalisaiiions which cut across the classical 
traditiolis and reduce to mere practical differences of stress what 
they had taken jas theoretical differences of principle ; and then 
forgoes all the simplifications these generalisations suggest in 
order to preserve as i>rim3,ry the distinctions which they have 
really reduced to a secondary position. 

Thus on p. 172 we^ead, “Workpeople have a value to the 
employer because . . . they create what has ... a value to the 
consumers. . . . f^irnilarly, the value of every other agent in produc- 
tion is the transmitted value of what it adds to production at the 
margin.” Now “cost of production” is sim]r)ly the sum of the 
market values of the agents or fnctors of production, and their 




values are confessedly nothing but elements in the value of the 
product, dependent in its turn wholly upon the relative estimate 
formed by the consumers of that product in relation to others ; 
and yet “cost price” is made throughout Professor Chapman’s 
book to figure as an independent and, in a sense, antagonistic 
force, generating curves of “supply i:)rice” co-prdinate with the 
curves of “demand price,” from which, on his own showing, they 
must derive the whole of their vitality. Indeed, the most in- 
genious and original chapter in the book is devoted to an elaborate 
attempt to work out a complete 2)arallelism betw^een the two. It 
is perfect as a piece of deductive reasoning, but it rests upon the 
startling assumption that every firm has unrestricted command of 
capital and of markets, and determines its output solely on con- 
sideration of the dimensions best suited to “the strength of its 
central organs ” (p. 81). At the end of his study, Professor 
Chapman seems to confess that his initial hyp6chesis is quite 
remote from the facts. Could he not have remained in close touch 
with those facts throughout his investigation if he had carried the 
great principle he announces boldly through? He would then, 
surely , have treated the whole direction of resources to ends as a 
continuous selection between alternafives, guided throughout by 
a weighing of the significance of the antici]>ateJ results, in which 
the “cost ” of adopting any alternative is simply the relinquishipg 
of some oiher alternative ; reward and sacriflce alike being mea- 
sured and determined by the taitirnate significance of the respective 
products, as anticipated by tlie pr(»ducers; the ]>oints at which 
things are bought and sold simply registering the relative success 
or failure of the anticipations under which the alternatives were 
selected, and tending to correct them. * • 

In the same way Professor Qhapman perceives* quite clearly 
that the c<inception of “ ditninishing returns” was originallj^, 
arrived at by treating one of th<^ factors (land) as constant, and 
applying successive “doses” of the other facb^rs to it; and also 
that this nadhod is equally apf dicable to any otl^er fa^ctor (labour, 
for example), and further, that w^hereas “labour” in the mass 
is in('apable of rapid increase, yet if may be diverted from one 
purpose to another to an indefinite extent, and that the same 
holds of land ; and like^vise that one factor of production may 
change its proportion to another and yet the two “doses” thus 
differently composed moy be equated; and tiiat all values of 
factors of production are derived from tlie value of their products. 
Nevertheless, he maintains the old dictum that rent does not 
enter into cost, keeps the distinction between increasing and 



diminishing returns as nearly las possible in its old place, and 
practically excludes land from his general formula of distribu- 
tion. He defines rent u>s payment for differential values of any 
kind (whether of land or labour*, for instance), and would admit 
apparently that it does not correspond to what the farmer pays 
his landlord any more than to what a rich man pays a fashion- 
able surgeon, and yet he treats it in direct connection with land, 
and in doing so seems to conceal as far as he can all the 
theoretical identities he has recogpjsed betv/een laud and other 
agents of production, burying them under insistence upon differ- 
ences in degree whif‘h he i to maintain distinctions tint no 

longer rest upon princip'e. 

But it will be pewived that all this is a tilt agamst the 
authorised current treatineut oi the subject, and not a 
criticism ^of ^ ProlCBsor (^-hapmaii’s book specifically at all. 
(rranted that accepted metlu^ds are on the whole satisfactory, this 
bock niay be taken as an expositiim that ‘leaves nothing to be* 
ftesired. Apart from all controvertible or controverted matter, too, 
it is particularly admirable in its insistence on the fact that “it is 
the impalpable subjective^ things in life, without a price, which 
give exchangeable goods their value ” (p. 164), and in the firmness 
with which this central principle is held in the luminous and 
judicious survey o| “problems of distribution “ which closes the 

Philip H. Wicksteed 

The Lawft of Supply and Demand. By G. B. Dibblee. 

(London : Constable and Co. 1912. Pp. 289.) 

This is a pugnacious book.- It presents, in its author’s words, 
“BWiithing less than a direct assault on the orthodox theory of 
political economy as established by early English economists.” 
No emendations, however thorough, will suffice. The whole 
structure must-be “swept away.” “Infinite and reverent modi- 
fications of obvious errors have been used to buttress it up, but 
they were unnecessary, and they ought not to save it now.” Such 
is the challenge. The author writes from the point of view of a 
business man, irritatel by the unreality of the economic theories 
he imbibed at college. To do justice to his position it is necessary 
to quote his explanation in full : — 

“My present study is not founded so much on a rather 
limited reading as on twenty years of reflection and experience in 
more tfcan one kind of business in three countries. The result is, 




unfortunately, a certain amouni of unfairness on niy part in 
delivering apparently random criticisms on a body of economic 
doctrines rather vaguely indicated as the orthodox English school , 
without selecting any particular author or book or even any 
precise argument, except in the case of Mill’s law of value. It 
is equally true that the later defenders and modifiers of these 
doctrines have been neglected in these pages, and no notice has 
been taken of the number of cases where criticisms have been 
accepted and embodied and at^iacks skilfully parried. If this work 
were put forward as primarily scientific, such omissions would be 
indefensible; yet since its object is practical, and as in order to 
be practical one must he brief, concentrated, and concerned 
chiefly with exposition rather than with criticism or controversy, 

I have been obliged to neglect the unessential. I consider ttie* 
modern modifications of the old school iinessen^iaL^ The old 
school stands unreplaced. Its original language is still current, 
and the men between forty and fifty, who guide the actual 
currents of business, know no other.” 

This explanation does not suffice to avert the criticism w^hich 
it anticipates. Among the “attacks” which have been “parried ” 
arc many which Mr. Dibblee himself labours in this volume, 
generally through some misconceptions of *the nature of the 
doctrines attacked. Again, fhe criticisms wbhji “haye beufi 
accepted and embodied ” includo a number of Mr. Dibblee’s own : 
and as when he expounds them he evidently attaches to them 
great importance, it is not easy to see w'hy they should be dis- 
missed as “unessential” when they become the accepted modifi- 
cations of orthodoxy. His answer seems to bp that business men 
are not aware of these modifications, but still talk “the original* 
language.” But this, though a ^ood reason for increasing the 
blame attached to the old doctrines, is a bad reason for demanding •• 
the abolition of the new, and a still worse rea^m for refusing to 
take notice of the new. If Mr. Dibblee couid have his way, and 
abolish the old orthodoxy root-and-branch, would business men 
cease to talk the old language? The tmth is they would talk the 
old language whatever the new might be. One is almost sur- 
prised in face of this to find Mr. Dibblee throw in his lot with 
the practical men in their controversy wi|h the economists. For 
it is the practical men, and not the economists, ^vho still mutter 
the old formuhio which are the principal objects of his ire. In 
particular, the remark of th».. New York lawyer, wdth which the 
book opens, that the tariff could have no influence on prices, 
because they were regiflated by supply and deman<^^ is an 



absurdity to which no economist who has ever existed could have 
given utterance. ^ 

It is not quite clear for what audience this book is intended. 
It is true that we are told, “It was not for economists that this 
discussion was primarily undertaken. It is rather to be described 
as a practical investigation of principles underlying the habits of 
business men.*’ feut there is no inconsistency between these two 
aims. The economist may weP be grateful for the acute analysis 
of the habits of business men which Mr. Dibblee provides. And 
it is difficult to see how he can llhpo to obtain readers outside 
the ranks ol economists. In spite of the rejuidiation in the passage 
quoted earlier of “scientit-c ’ or “controversial” inte?ition, the 
book is essentially controve’^sial. starting point of each 

aigument is the critirisia of some economic doctrinr^s treated 
frequently in an allusive way. When he leaves controversy 
behind, tffe %.athor propounds formal theorems with more 
elaborateness and precision than lucidity. His difficoilt style and 
technical, even mathematical, language are fitted far better for 
“scientific” than for the “practical” reader. From the point of 
view of “exposition” it would be difficult to imagine a worse 

But it is a book, which is well worth the consideration of those 
econo^nists wffio have the patience for winnowing the wheat from 
a plentiful adfhixture of chafi', and can supjiress their irritation 
at the unfairness of many of the^ writer’s attacks ujiGn them. 
For Mr, Dibblee fails altogether to understand the i^oint of view 
of the ordinary economist. He himself quite frankly deals with 
the problems as they present themselves to the business man ; 
. and along this lin^ he contributes many valuable suggestions. 
But the" haste in drawing conclusions, and the proneness to 
exaggerate the importance of the# points on which he fastens, 
qualities which are the inevitable counterpart of tlic ins]>iring 
zest with which he throws himself into his task, and the freshness 
and independence of his treatment, lead him to forget that there 
is another *point of view from which economic problems can 
profitably be studied. The point of view of the State or society, 
which economists for the most part adopt, is in several ways 
different from that of the business man. For one thing, it in- 
volves a longer period of time ; and it is over the question of time 
that Mr. DibFIfee comes most conspicuously to grief. He fails 
entirely to appreciate the conception of the “long run,” a phrase 
for which he has the most absolute contempt. Economists will 
be surprised to learn that this phrase arose out of a kindly, but 


mistaken, “theory of perfectibility,” that ii was originated by 
men “who believed passionately* in a possible ^tate of perfection 
in the material world, in the power of miinkind to recognise it, 
and in a natural inclination to move in that direction.” This 
inability to understand “the long run,” and its attendant assump- 
tion, “other things being equal/’ runs throughout the whole book 
and vitiates many of the author’s most triumphant pieces of 
reasoning. It leads him to make an attack on the symmetorical 
treatment of supply and demand, and the principal laws relating 
to them, under a misapprehension of their nature. While h^ 
imagines himself to be overthrowing the ordinary theories of 
long-period value, he is in reality rpi^-king a contribution to the 
study of short-period value. 

His contribution, so regarded, is a very useful one^ and bis 
analysis throughout is singularly penetrating and acute. Of 
especial interest is his treatment of “aist of pr .eduction/’ an 
“unilluminating” pjirase which he holds responsible for much 
error and misunderstanding. In his view, “it costs more to scT 
most articles than to make them ” : a proposition which is 
certainly worth examination, supported as it is by interesting 
evidence and estimates. “ Productive power has outstripped 
desire,” and it is “selling” which is the chief difficulty for society 
to-day as for the man of business. 

“The productive power of modern industry is so tremendous 
that a comparatively small aipount of capital laid down in some 
dozen suitable^ English, German, and Ariiericau towns with a 
well-trained industrial population, will be able to produce most 
kinds of goods capable of indefinite multiplication euflficient for 
the whole world.” ‘ 

Our industrial system has two devices for dealing with this 
embarrassing product, the control of supply and the manipulation 
of demand. The ccrntrol of supply includes not^merel}^ the recog- 
nised and valuable function of adjustn^ent between different 
places and different periods of time, but, in addition, a permanent 
“holding back.” “If we open the sluices of modern productive 
resources developed under the factory system in the last seventy 
years, goods pour out at an amazingly cheap, and ever cheaper 
rate, and the market is flooded beyond |iny possibility of com- 
mercial remuneration.” The duty of the seller, accordingly, “is 
one of holding back the immense output of mo'Hern production 
and allowing it to filter slowly through their bands.” ]t does not 
occur to Mr. Dibblee that this can hardly be a very valuable 
service for the social point of view. 4kHis confusion wherever the 



element of time enters in pievents him from distinguishing 
clearly between, a beneficial “holdihg back’* to meet and to avert 
fluctuations, and a “holding back” of this permanent and 
statical nature which is plainly wasteful. . A similar uncertainty 
of conclusion marks his treatment of the “manipulation of- 
demand.” We we told that “misrepresentation has become a 
chief part of the advertiser’s stock-in-t^ade,” that “nearly all 
trade is, from a psychological necessity, dependent on a habit of 
misrepresentation which is both aljsurd and dangerous,” and the 
talents required for a successful seller are approvingly illustrated 
by the remark of a man who bad made a large fortune : “Borne 
people think me not very bright, and 1 cannot make a good 
speech nor tell a good story ; but 1 can sell a man a bad picture 
V^hich be doesn’t want.” A Socialist could not desire a more 
trenchant ^yjxisurc of the wastes involved in our present cora^ 
mercial system ; and it is somewhat surprising to find Mr. Dibblee 
after this analysis deducing from the very magnitude of the part 
played by “the manipulation of demtind” and “the control of 
supply ” an additional argument against State Socialism. ‘ The 
State, he tells us, is a bad seller, and unfitted for the difficult 
task of “holding back supply” ; but one who follows his ruthless 
description of these processes may reasonably wonder whether 
their p^rformajpee is on the balance socially desirable. 

But the value of Mr. Dibblee’s book does not lie so much in 
his main arguments, as in the ideafe which he continually throws 
out by the way. “ Suggestive “ is the epithet which can most pro- 
perly be used to describe his work. He pours forth a stream of 
shrewd observations upon every kind of topic, casual labour, 
women’s wages, and the like, which invariably interest and 
stimulate even when they do mot carry conviction ; his psyebo- 
logiCjal analyses are particularly acute. In addition, he brings to 
his task a vivid imagination, <x useful descriptive power, and a 
happy knack of illuminating a difficult point by some apt illustra- 
tion or telling phrase. 

What, for instance, could be better than the following illustra- 
tion of the relations between local markets and the larger ones 
in which they are embraced? “We must imagine the small 
markets as being centres of extreme fluidity in an encompassing 
medium of lessqj: but partial fluidity, so that local agitations can 
affect the slower-moving enveloping medium, and carry inter- 
mediate vibrations to other local centres.” 

Or, in another vein, what could better hit off the Anti-Trust 
legislation in the United States, with its uncertain principles and 


vague phrases about combinatioji “in restraint of trade,” than 
the remark that it is an attempt “to endiulate the legislation' of 
the White King in Alice in Wonderland when h^ wrote : Rule I. 
' All persons more than a mile high to leave the court ’ ” ? 

Or, again, what neater definition of “necessaries” could be 
given than : “we are accustomed to call those objects the 
* necessaries of life ’ where our habits permit very little choice in 
selection ” ? 

These are merely instances of the fresh ideas and apt remarks 
which are scattered on every other page, and serve to enliven 
frequent tedious wastes of muddled reasoning, and misunder- 

H. D. Henderson 

The Constitution and Finance of English, Scoitv<h, and Irish 
Joint-Stock Companies to 1720. By W. It. Scott, Litt.D. 
(Cambridge: University Press. 1912. Vol. 1. Pp. Ivi-h 

We have now the whole of Dr. Scott's book, of which tlie 
second and third volumes were reviewed here in March and 
September, 1911. This volume contains thd genei'a! history of 
the joint-stock : its predecessors gave us tlie individual histories 
of all the companies. The three form a work of which British 
historical scholarship may b5 proud. Some thirty distinct MS. 
collections have been consulted- —counting the Museum and the 
Record Ofiice each only as one ; there is a general bibliography of 
about five hundred works, and a pamphlet bibliography almost 
as long, not to mention bibliographies of official publications and^ 
newspapers. It is no exaggeration to say that dozens of books, 
each embodying a serious piece of historical research, could have 
been carved out of Dr. Scott’s materials. ^ 

The method adopted in this volume, as ^oreshad^)W*ed in a 
remarkable appendix to Vol. 111., is the study of joint-stock com- 
pany financial history in close connection with national financial 
history. This raises a number of difficult problems in selection 
and arrangement. At times one is tempted to think that sections 
of the general history are not sufficiently relevant to the matter 
of joint-stock to justify the very full treatment which they receive ; 
at others one wonders on what principle certain aspects of 
financial or general economic history have been omitted. But 
the method itself is fully justified. From the beginning, when 
the Russia Company shipped naval stores from the White Sea, the 


Mines Eoyal sought calamine stone” for gun-metal, and the 
Mineral and Battery Works rhade the guns ; down through the age 
of the joint-stock privateering syndicates that “singed the beard 
of the King of Spain ” ; through the history of the East 
India Company that struggled with the Dutch, and the Hudson 
Bay Company tl^at got parliamentary panction because it was a 
thorn driven into the side of the French ; through the monopolies 
controversy and the I^and Bauk controversy, where politics so 
often decided economic*, judgments, away to the struggle between 
the two East India Companies *.nd*the greater struggle between 
the South Sea Company and fch^* Bank for the profit of l^earing 
the National Debt : thiougb all this, and much more, the fortunes 
of the chief companies are hound up with the fortunes of the 
St^.te. And from time i>o time the Stale made use of their capital 
or their creUi , from the day when Elizabeth took long credit 
from the Comnany to the tinal politico-economic adventure 

of government with the South Sea dire(*,tors. , 

^ It is for Ihc reign of Elizabeth that Dr. Scott’s method is 
perhaps most instructive to the general historian. The Queen 
lends men of war to the Africa Company and takes shares in the 
raiding syndicates, partly to get profit, partly to get i)olitical 
control. The full study of her official and unofficial finance 
explai’^'s each stage and turn of her notorious parsimony, and 
justifies* it. Eight through the book the general historian is 
fortified or corrected by the less teghnical results of Dr. Scott’s 
financial research. It is perhai)s not difficult to correct the finance 
of Froude [p. 81 n.] ; but Gardiner, who is also corrected more 
than once [c.(7., p. 245], is nobler game. The noblest of all is 
^dam Smith. With him we get on to luore technical ground. 
Very little, indeed, of his" generalisations about joint-stock 
survives some dozen pages of Dr. Scott’s criticism. Some of the 
}X)irft8, as the critic puts them, deserve to be summarised. 

Firstly, Smith* absorbed what Dr. Scott holds to have been 
a mere .eighteenth-century prejudice against the joint-stock 
system itself — “fhe pernicious art of stock -jobbing “-—based upon 
a distorted memory of the period 1695-1720. The South Sea 
directors were corrupt enough ; but had they been never so pure 
their faith in the virtue^ of a “fund of cr<?.dit,” which almost all 
their contemporaries shared, and w^hich had no necessary con- 
nection with “stack-jobbing,” was bound to lead to a crash sooner 
or later. “The Fire Insurance Company, the Bank of England, 
and the Million Bank all carried on business without any working 
capital provided by the members ” [p. 344] , and the South Sea 

No. 89.— VOL. XXIII 



did the same, only on a larger scale* Corruption was not specially 
characteristic of the companies of the later seventeenth and early 
eighteenth centuries [pp. 451, 463]. The main cause of the 
crisis of 1696”7 was not “ stock- jobbing ** [p. 357] : the stock- 
jobber was the scapegoat. The companies of that time were not 
all “bubbles’* — that is, fraudulent or irrational schemes — any 
more than were the companies of 1720. 

Starting with a prejudice against joint-stock and a know- 
ledge derived mainly from Anderson, Smith picked out — some- 
times, according to Dr. Scot^ [p. 450], invented — for animadver- 
sion unsuccessful periods in the history of such concerns as the 
East India Company and the Africa Company, and omitted 
successful and creditable episodes. That joint-stock foreign 
trading companies could not hold their own against private adven- 
turers, as Smith maintained, is not true of the period under 
review; the few successful interlopers were usuahy themselves 
small joint-stock concerns. The famous dictum that joint-stock 
— apart from monopoly — is only likely to succeed in routme 
businesses is also challenged. The Bank of England had no 
monopoly against private bankers and its early days w’ere 
“purely experimental.” The early water companies had not 
complete monopoly and were highly experimental. “The capital 
of companies was used in the main for ventures which were either 
altogether new trades or revived industries, or those proix)sed'to 
be conducted by new metho^ds ; or again, in cases where there 
was an exceptional degree of risk” [p. 461]. Many succeeded, 
but not by routine. 

Naturally, Dr. Rcott is able to correct historians of commercial 
crises — like Juglar and Marx Wirth --who have not his first-hand^ 
knowledge. [See pp. 390, 464, 468.] In his refeiences to Jevons 
and the sun-spots, however, he takes no account of the recent work 
of Jevons’ son. He can easily traverse a confident dicturii of 
Sornbart that the really transferable share only came injo exist- 
ence in the eighteenth century. As early as 1568, “jjeicester 
had directed a share should be sold, just as a modern stock- 
holder gives an order to his broker” [p. 443, and Vol. II., p. 
416 n.J, and there was abundance of sale in the seventeenth 
century. True, new shareholders in the East India Company had 
to pay a heavy sum for their “freedom^’ in the early days, just 
as in regulated companies [p. 152] ; and this made shares imper- 
fectly negotiable. But after 1624 the fine was so much reduced 
that, “on any considerable purchase,” it was no more than a 
moderate registration fee. Ultimately it was abolished. In any 

1913] SCOTT: joint-stockOoomp'NIES to 1720 88 

case, the fully developed stock-cealing of the last decade of the 
seventeenth century, with Houghton’s price-lists and his nick- 
names for companies wilh long -winded titles [p. 329], obviously 
presupposes a good many years of perfectly negotiable securities. 

Dr. Scott deals rather briefly in his first chapter with “the 
various lines of economic development which converge in the first 
English joint-stock companies,’* but he savj all that need be said. 
Without losing himself in the antiquities of the commeuda, the 
societas, and the Bank of St. George, he points out the scanty 
evidence for direct influence from the continent in the early 
sixteenth cencury. After r^‘'‘(*ing his earlier volumes, especially 
the history of the Germar speculators in the Mines Ro3"al, one 
had wondered what weight he would assign to the transfsrable 
shares in German mining enterprises that were well-known in 
the fifteenth^.! tury. He does not develop the point, though he 
refers to it. No doubt he is right to follow in the main more 
obvious lines of growth. All the machinery W government and 
th8 corporate life are to be found in tho later guilds or in the 
Merchant Adventurers. When the Merchant Guild of Dublin in 
1452 ap^xiints buyers and then shares out their purchases among 
the members, or when the Newcastle Adventurers, in 1599, also 
make a corporate purchase, w^e are brought very near to joint- 
stock ac4on. “When such bargains became the rule . . . the 
regulated company would be turned into a joint-stock company ” 
[p. 12] . Moreover, the early joint-stodlc conifianies often paid divi- 
dends in goods, a further link with the older corporspte purchases 
and sharings ; while freemen of the Newcastle Merchant Adven- 
turers, at any rate, “^in small bodies entered into partnership” 
[p. 11] . Given a permanent partnership of all the members in a 
fairly small society, such as were the earlier joint-stock enterprises, 
and the transformation is complete. ‘^The Russia Company came 
into existence with^a complete internal organisation, which in 
tHe main* was transferred from the previously existing type of 
corporation.* No provision was made in the charter for any of 
the functions that would arise out of this company being formed 
on a joint-stock basis” [p. 2l]. 

The growth of “joint-stock characteristics” can be traced 
gradually over a period of S century and a half. In the sixteenth 
century, and far dqwm the seventeenth, the “share” was a fixed 
fraction of the enterprise, varying in monetary amount as the 
business varied; not, as to-day, a thing with a fixed denomina- 
tion, of which less or more may be issued according to the business 
situation [pp. 44-5]. Hence the difiiculty of getting calls paid 

• * g2 


up, for the shareholder never knftw his maximum liability. Hence ^ 
also the subdivision of shares into “halves, quarters, and even 
eighths,” in the Mines Eoyal as early as 1571 [p. 45]. A little 
later we do, no doubt, get the Frobisher expeditions, in connection 
with which it was resolved that £100 was to be reckoned “one 
single part or share in stok of the company ” ; but Dr. Scott only 
places the landmark which indicates the beginning of the modern 
conception of a share at “the doubling of the capital, reckoned 
as paid up, by the East Indica Company in 1682” [p. 304]. “As 
long as the capital was divided into ‘ portions,’ or shares, any 
appreciation of the property was reflected mainly in the divi- 
dend ” ; the “watering” of 1682 involves a new conception. 

Subsidiary companies, which seem so very modern, appear 
already in the Mineral and Battery Works in 1571 [pp. 58-9. See 
also Vol. II.]. The term director first ai)pears inj' charter, that 
of the Africa Company, in J618 ; but the concern had at its head, 
like the older regulated companies, a Governor and a Deputy- 
Governor. The twelve directors were the Governor’s Council 
[p. 151]. The first traces of limited liability occur in the Fishery 
Society in 1634. There had been a deficit and it was resolved 
that capital subscribed from that time forward should be exempt 
from liability for this deficit [p. 228]. Then, in 1662, limitations 
of liability are granted to the East India, Africa, and Poyal 
Fishery Companies by Act of Parliament [p. 270]. Adam Smith, 
by the way, was wrong in supposing that all chartered under- 
takings enjoyed this privilege [p. 447]. 

At the time when it doubled its nominal capital the East India 
Company had for many years indulged in borrowings, which Dr. 
Scott calls “a species of striving towards the modern debenture^ ” 
[p. 304]. Indeed, companies had borrowed on registered bonds 
from a very early date. By the end of the seventeenth ce^ntury 
we have bonds of a different sort, “which wen? in effect preference 
shares,” in the Mine Adventurers’ Company [p. 365].* 

The problems in ca)nomic history, other tharw those strictly 
connected with joint-stock, on which Dr. Scott throws fresh light, 
or in relation to which his opinion merits careful consideration, 
are almost innumerable. There is the* account of FUizabeth’s 
maximum interest law, which financial difficulties forced her to 
break in proprid persond, jast as Charles II. broke the law a 
century later. There is an interesting calculation by which we 
can determine the average cost of certain Elizabethan naval ex- 
peditions per ton or per man, and so can estimate the capital 
employed in cases where we have no precise financial statistics 


[p. 77]. The monopolies agitations under Elizabeth, James, and 
Charles are fully discussed. Parliament comes rather badly out 
of these discussions; as do the “Free Traders “ and ostensibly 
disinterested interlopers of -the seventeenth century out of a long 
series of references. Almost invariably the agitator against 
monopoly in one# sphere seeks monopoly for himself in another ; 
possibly even in the sphere of his denunciation. In the matter of 
the Navigation Laws, I)r. Scott crmiirms and strengthens Dr. 
Cunningham’s adverse verdict ori^their workmg ^o far as the 
seventeenth century is concorjjed. So one might go on. The 
book is inexhaustible in its wealth of fact. Jt is not, perhaps just 
what one would call a v^nrk of art; but though one might easily 
carp at this bit of construction or tliat turn of phrase, and though 
one might disagree with many obiter dicta in a work which takes 
so wide a s -' Oop, it is amazingly ditticult to dissent from the 
author's carefM.ily weighed judgments on the essentials. He 
knows his ccunpanies as a trained and cautious investor knows the 
oincerns in which his Ovvn capital lies On the strength of his 
knowledge it seems easy to hx the proper times for buying 
Frobishers or selling Battery Works. And he has wrung out that 
knowledge from his authorities with a magnificent scholar’s 

J. H. Clapham 

The Agrarian Problem in the Sixteenth Century. By R. H. 

Tawney. With six maps in colour. (London : Longmans. 

1912. Pp. xii + 4fil. 95. net.) 

• Here we have *a substantial, most useful, and altogether 
notable book ; the work of a man alert, full of ideas, touched wdth 
emotion, yet restrained by the scieidtifie conscience. It is dedi- 
cated to the president and secrejtary of the Workers’ Educational 
‘Associatton, and in his Preface the author tells us he has learnt 
much from J‘the friendly smitings of weavers, potters, miners, 
and engineers ’’ in the classes he has conducted in connection with 
that body during the last lour years. TVobably, if he had had 
nothing to do with “the W.E.A.,” Mr. Tawney would have 
written a book very mudi like this. Rut I think we can discern 
now in his work an intensity of sympathy with “the under dog,” 
and at the same time a seiis6 of the limitations of class-outlook 
such as only intimate intercourse wu'th w'orkp(‘ople could have given 
him. If in any degree this book can be called an outcome of 
the W.E.A,, then for the scholar, at any rate, the W.E.A« is 




beginning to be justified by its fruit. And this is a welcome 
conclusion. No one who has watched the W.E.A. closely can fail 
to have suspected one grave danger : the danger lest the lecturer 
on economic topics (naturally the most attractive) should be 
biassed unconsciously towards j)opular conclusions. I must con- 
fess I have felt the temptation myself when addressing working- 
class audiences : just as I have felt it, in a different direction, 
in addressing audiences of eniployers. One’s points can be made so 
much more effectively, the glint of approval can be brought so 
much more readily into the eyes of one’s auditors, if one lets one- 
self go and omits qualifications ! It is reassuring to be presented 
with a book like this, which has come out of a W.E.A. atmo- 
sphere, tingling with feeling, it is true, and yet on the whole so 
balanced and fair-minded. 

In approaching the subject Mr. Tawney has enjoyed advan- 
tages not at our disposal, who came to it more than twenty years 
ago. To build on We had then little more than Rogers and Nasse, 
together with the mediteval Extents and the like in the Rolls arid 
Camden scries, on which Seebohm had recently thrown so 
powerful a light, a few j)a8sages of More and Latimer, and the 
writings of Coke. But since then Vinogradoff has made clear the 
legal disabilities of mediawal villcnage ; Maitland, following 
Meitzen, has brought out the diversity of local conditions ; '^age 
has brought exactitude into our knowledge of Commutation ; 
Leadam has published and "Gay has worked over the Enclosure 
returns; and*, most effective perhaps of all, Savine has revealed 
the proceedings of the courts in the matter of copyhold and cus- 
tomary tenure. And, by the way, our author does not, perhaps, 
use quite the right word when he speaks of a writer of 1892 as 
“overlooking” these law' cases, as if he might have been expected 
to know about them. He wohld reply, as Dr. Johnson did when he 
was asked how he ciiiue to majce a mistake^ in his Dictionary : 
“Ignorance, sir ; pure ignorance ! ” But then e\erybody else was 
equally ignorant in 1892. Mr. Leadam, it is true, called attention 
in that very year to the sixteenth-century Common Law cases ; 
but his interpretation of them was dpen to grave objection, and 
has, in fact, been subsequently dis];x)sed of by Mr. Savine. It 
was the articles of the latter scholar in 4902 and 1904 which first 
put the matter in the right jierspective by bringing out the signi- 
ficance of the earlier Chancery proceedings ; and these were only 
made available to him by the then recent publication of the 
Calendar. No sensible man who kept his eyes open could write 
just in the same way after 1904 as was natural enough before. 


^ , 

Whatever hia advantages, Mji. Tawney has made good use of 
them. He has immersed himself in the literature of the subject ; 
he has utilised the fresh material printed in the Victoria County 
histories ; he has himself collected a large number of transcripts 
from the Record Office, and has subjected them to a painstaking 
statistical analysis. The result is a work which, for the first time, 
covers the whole field. It is all run into an argumentative mould, 
so that no one can go to sleep )ver it ; it is enlivened by forcibly- 
expressed generalisations, and by ^patches of rhetoric w^armly 
purple ; but at the end one has feeling that the object has been 
attained : we feel that we now leally know^ the agricultural life 
of the sixtt'enth century in us fulness and complexity. 

To go through all tne main topics of Mr. Tawney’s book, 
desirable as it would be, is more than can be undertaken on the 
present occaSi'm. I must content myself with mentioning what 
seem to me his chief personal contributions to the story. The 
first is his accciunt of the way in which, in the Midlands and the 
Sbuth, the old symmetry of the yardlands had already, long before 
the Enclosures, been broken in upon by exchanges and purchases 
among the customary tenants. Another is the evidence he adduces 
of the grant both of pieces of the waste and, still more significant, 
of pieces of the deiliesne to customary tenants : facts which have 
noJit Je bearing on the legal character and economic effect of the 
subsequent enclosures. A third is the firoof of the conservatism 
of Northumberlo.nd, and its explanation in the military import- 
ance of the tenantry ; to which, as Mr. Tawney acutely points out, 
the military motives for preserving the peasantry which actuated 
the Tudor Government are closely analogous, on a larger scale. 
And coming to the* results of the enclosures, a point novel, I 
think, to modern discussion is made by Mr. Tawney when he 
calls attention to the crowding <5f workless cotters into the 
remaining “open fielden towns.” Especially interesting, too, is 
Mr. TaVney’s treatment of the question oi the effect of govern- 
mental intervention by means of legislation, commissions, and 
such prerogative tribunals as the Star Chamber and the Court of 
Requests. With his conclusion that this intervention “mitigated 
the hardships of the movement to the rural classes,” and “imposed 
a brake which somewhat eased the shock,” he gives us good reason 
for acquiescing : I should be inclined myself to venture further, 
and to say that while governmental intervention did not prevent 
a good deal of enclosure from taking place, there would hav^e been 
very much more enclosure had there been no intervention. I am 
glad to see, also, that Mr. Tawney recognises some merit in the 


Stuart “ideal of government by pixerogative.” Perhaps in time he 
may think even more kindly than he does at present of the Stuart 
Council. His present opinions are on the side of the seventeenth- 
century squirearchy politically and against them socially. Not 
infrequently, I have noticed, the Whig “infection doth remain 
yea, in them that are,” like Mr. Tawney (economically), 

I have noted down a number of dubitanda which need not 
be dealt with here at any lei\gth, but which the author may care 
to consider for his second edition. P. 7, n. 2 : “Hales was quite 
conversant with the effect on general prices of an increase in the 
supply of money.” Did Hales get beyond the effect of debase- 
ment? Was not the idea of the result of simple increase intro- 
duced into his treatise in 1581 by W. S.? (See ed. Lamond, 
pp. xxxiii, 185, 187.) P. 126 : is it quite certain that the rules 
as to succession in High Furness were really the wwk of “the 
whole village” — “the prudent men of High Furness”? “It is 
now ordered ” sounds remarkably like a royal ordinance or regulHT- 
tion, especially when we notice the motive recited at the head of 
the document. P. ]66 : surely the explanation suggested for what 
is justly called “the strange statement of Hales” — viz., that the 
chief destruction of towns (i.c,, villages) w as •before the reign of 
Henry VII. — that this “may well have been a curt summary of 
the impression produced by a century of gradual consolidation and 
piecemeal enclosures carried ‘-out by the smaller cultivators,” is, 
on the face of it, very improbahh*. P. 258 : does the narrative 
here quoted refer to any but freeholders? the text says nothing 
about “other tenants.” P. 809: “the flooding of Europe with 
American silver” has, hitherto, been commonly supposed not to 
have affected prices in England till some time after the discovery 
of the Potosi mines in 1546*— according to Adam Smith not till 
about 1570. P. 381 : for further corroboration of “the view that 
the religious houses had been easier landlords than thci new lay 
owners,” reference may be made to the author's own citation from 
Becon, p. 7, n. 1 ; to the fears expressed by Starkey {England in 
the Reign oj Henry VlII,, p. Iviii, 5eq.); to the last clause but 
one of the great act of secularisation, 1536 ; and to the complaint 
by Hales in 1548 as to its non-obse#vance (Common Weal, 
p. xlix-1). A convenient catena of passages from contemporary 
writers will be found in I’rofessor Cheyney’s book. That the 
religious houses w^ere “easier” is nol to be attributed to their 
religious character, but to* the conservatism of all corporations. 
Mr. Tawney's comparison with “fellows of Oxford colleges” 


(p. 383) tells in the same direction ; for colleges were notoriously 
conservative, even in the nineteenth cen^urj, in the management 
of their estates. 

W. J. Ashley 

Waterways versus Railways. By Harold G. Moulton, 
Instructor in Political Economy in the' University of Chicago. 
(Boston and New York : Houghton Mifflin Company. 1912. 
Pp. 468. Price $2.) * 

The Lakes 40’the-Gulf Dc'i) Waterway. By Willi ym A. 
Shelton, Graduate rnudent in Political Economy in the 
University of ^'Uiic^i.go. (The University of Chicago Press, 
Chicago, Illinois. 1912. I^p. 130.) 

Mr. Moi lton’s book is very interesting throughout. But 
the most interesting parts of it ave the pioface and the conclusion. 
In the preface he describes the attitude of *tiis mind as it was 
^hen he began his study, and the ebange of opinion that was 
forced upon him as he became more and more familiar with the 
facts. In his last chapter he deals with what may be called 
the psychology of the waterway movement, and explains the 
causes w'hich in his view account for the fact that the arguments 
whjeli have convinced him have so far not convinced the man 
in the street. 

Here is what the preface says! — 

“When this investigation was undertaken, the^author shared 
in the common belief that traffic of certain kinds can be carried 
at substantially less^cost by water than by rail. ... A reading 
of the literature of the subject, however, soon made it evident 
that no adequate analysis of the cost of transportation by water 
had ever been made; that it was^merely tacitly assumed that 
wafer transportation is cheaper than that by rail ; and that the 
rate comparisons sometimes presented in support of this assump- 
tion were .virtually meaningless. This discovery led to a 
shifting of emphasis to the cost a.sf)ect of the problem, the question 
of traffic assuming a secondary place. . . . When the author 
went to Europe he shared in the general belief that water trans- 
portation on the Contine?it w^as of undoubted economic advantage. 
. . . But to the surprise of the author it soon became apparent 
that in Europe, as in the United States, little consideration had 
ever been given to the inclusive cost of transport by water as 
compared with that by rail, and that the rate comparisons 
usually made proved nothing whatsoever. “ 


Mr. Moulton’s very careful aird acute investigations of canals 
both in esse and in posse in the United States, and in all the 
principal countries of Europe, which led him to the change of 
view he has so frankly recorded in the preface, occupy the bulk of 
the book before us. They show in elaborately particularised 
and closely localised detail what not a few authorities on the 
subject, such as Colson in Prance, and Ulrich in Germany, have 
long ago asserted as a general proposition — that, in Mr. Moulton’s 
own words, “there can no longer be any question that, so far 
at least as canals are concerned, the cost of transportation, all 
factors included, is almost universally much greater by water 
than b}^ rail. ... All attempts to make canals an integral part 
of a national transportation system, w^hether for the carriage of 
high class or low grade freight it matters not, is an attempt to 
turn backwards the clock of time. In the case of rivers, how- 
ever, the situation inay at times be somewhat different; . . . but 
it is only in rare instances that river trans{X)rtation can be made 
as economical as transportation by rail.” 

Mr. Moulton’s case, wdiich in the o[)inion of the present 
writer is absolutely conclusive, rests, of course, in the main on 
the fact that the ordinary estimates of transportation costs by 
rail and by canal include, in the case of the railw^ay, all costs; 
in the case of the canal, only sucii ousts (in France about one-half 
of the whole) as are borne by the trader himself. It is difficult 
to understand bow so one-sided a basis of comparison can ever 
have been suffered to pass unchallenged. But apparently it has 
been so common as to be taken for granted. One striking 
instance nearer home than the United States may perhaps be 
given. Our own recent Eo3^al Commission on Canals sat for 
several years, and published eleven volumes, and a Eeport con- 
taining 974 paragiaphs. Not one of the 974 paragraphs discusses 
the question, which to an ordinary economist wuuld surely have 
seemed fundamental, whether there are any,*' and, if so, what 
circumstances in which canals are a more economic means of 
transport than railways. Nor does the Eeport so much as allude 
to the very pertinent fact disclosed tn the Eeport of their Sub- 
Commissioner, Mr. Lindley, that, whereas the total cost per 
ton kilometre on the railways of France^ for all traffic, high class 
and low class, small and large consignments, is 0‘55d., the total 
cost on the w^aterw^ays, for low-class bulk traffic only, is 0*57d. 
As, however, it also appears that only one-half of the canal cost 
is paid by the trader, while the other half is thrown on the 
shoulders of the taxpayer, it is easy to understand how the trader 



comes to assert that canal carriage is cheaper. Why, however, 
a Eoyal Commission should take the truth of his statement for 
granted is not so clear. 

The bulk of Mr. Moulton’s book consists, b^B has been said, 
of a description and appreciation of the existing waterways and 
the schemes for new waterways in th^' principal countries in the 
world. Each individual waterway, how^ever, has, generally 
speaking, no Interest excep' for those whom it particularly 
concerns, and the cumulative effect of the argument is only 
reached as Mr. Moulton shows to us one waterway after another, 
points to ihe traffic it carrier^, and the total cost of carriage, and 
proves that in almost e/ery case ^the Rhine is the one con* 
spicuous exception'^ the dnal balance is, not a profit, but a deficit. 
There is, therefore, nothing to be gamed by an attempt to make 
a summary ^/t a review. Two interesting points may, however, 
be noted in inference to Germany. 

The first is that the otficial Prussian policy forces a very 
4arge and rapidly growing traffic in cool and iron in the Ruhr 
district on tc. the waterways ; and that new^ w aterways are being 
constructed to deal with this growing traffic, wiiich, it is alleged, 
the railways are unable to cope with. Mr. Moulton points out, 
not only that raiK\'ays both' in England and America have no 
difficulty in dealing with much heavier traffic, but that prac- 
tically ^he whole of the Ruhr traffic either originates or terminates 
on the railways of the district. N»w, says he — and it is difficult 
to see an answer to the objectiem — if railways ca» deal wdth the 
traffic at the focus of congestion, a fortiori they can deal with it 
nearer the circumference, more especially as the present policy 
keeps both the loading and the unloading wdthin the congested 
area, whereas, if the railways were allowed to carry the traffic 
throughout, either the loading or ihe unloading w^ould normally 
tafte 2 )lace outside it. 

Tho second 2 ) 6 int is this. Mr. Moulton asks if it is possible 
that “the German waterway officials and the German people 
in general *can themselves be unaware of the economic losses 
involved in waterway expenditure. Is there something back of 
the scenes, some iiolitical interest, or some dominating force, 
which virtually compete the Government to continue the policy 
of subsidising the waterways, or are the German people simply 
in the dark as to the economic waste involved?** 

He notes that German railway officials regretted at the 
International Railway Congress at Berne in 1910 their in- 
ability to take part in the discussion of the question wdiether 



railways should be sufficiently qpctended to meet the increasing 
demands of commerce ; that high officers of the Prussian railways 
have, declared the official statement of the Prussian Government 
that waterway extension was required to cope with traffic for 
which the railways must be inadequate to have been made without 
their being consulted : and that twenty high dignitaries who voted 
in 1899 in the Prussian House of Lords against the ambitious 
Rhine-Weser Canal scheme were summarily removed from their 
posts. And he comes to th^^ conclusion, which is, be it said, 
undoubtedly correct, that waterw’ay schemes are being pushed 
forward in Prussia, not because they are econoniically sound, 
but because the German Emperor believes in them. If we may 
vary a famous saying of another Emperor five centuries earlier, 
Ego sum irnpcrafor Gcrmanivus ei supra econorniam. 

To Englishmen, the chapter on the Manchester Ship Canal 
has a more direct interest, es[)ecially as most people believe that 
the results have justified its construction. Mr. Moulton shows 
that the Canal was estimated to cost TS, 000, 000. It has co?'. 
more than double. It 'was estimated to pay a 5 per cent, 
dividend upon the whole share capital of £8,000,000 in the 
second year of operation. .In fact, now, sixteen years after its 
opening, it has never even met the interc*.st on its debt. It was 
estimated to earn in the second year of operation £479,000 net. 
In fact, it earned £ 107,000 gross Further, as to its Indirect 
effects : Manchester shows growth of population during the 
decade 1 891-1901 l(‘ss than that of Liverpool and Birmingham, 
and not half that of Leeds: the reduction in railway rates 
between Liverpool and Manchester is ‘‘slight at best.” One 
might perhaps add that, had the £17,0(X),CX)0 been spent, not 
on making a canal, but as a free gift to the Lancashire railway 
companies, tliere can be no doubt that they would have agreed 
in return to carry cotton for nothing, and to give to manufac- 
turers and operatives alike perpetual free passes betw^een 
Manchester and the pleasure towns of the Ijancashire coast. 

One criticism should, I think, be made of Mr. Moulton’s 
otherwise excellent work. In referring to railways, he does not 
seem to be on as sure ground as in dealing with canals. More 
than once he appears to compare sorfie [)articular canal in 
reference to construction cost, actual traffic, or traffic capacity, 
not with its real analogue, some specific main line, but with 
some railway system as a whole. 

A word as to Mr. Moulton’s psychology of w^aterway sup- 
porters. He believes that the popular mind still retains a 

1913] MOULTON : waterways versus railways , 93 

recollection of the way canalrf opened up new highw^ays of 
commerce, and still hopes that the} will once again come to 
their own, and with their individualistic methods, deliver,,, us 
from the desfK)tism of those ,?reat capitalistic* monopolies the 
railw^ays. This substratum of popular sentiment two classes 
combine for theif own ends to convert into a definite conviction! 
The first class consists of the politicians, s^unetimes merely 
because they desire to head a ];x)}>iilaf movement, but often 
because they have a personal “axr* to grind/’ The waterways 
agitation in Illinois, he says, 'has disgraced the very name of 
the State. Unless the whole question of vv*aterways is placed 
in the hands of impartial investigating bodies, . . . the country 
will waste millions in projects, the general result of which will 
be to enlarge the paironage, or further line the pochets of our 
practical pohiiciarci.’ The second class consists naturally of the 
traders actua’ly situated on 'vaterways who hope to gain a 
differential advantage over less conveniently situated rivals. , 
**^vVhen the Sta.te of New York voted by plebiscite on the enlarge- 
ment of the Firie Canal in the non-canal Counties voted 

against it by large majorities, for instance, 12 to 1, and 10 to 1 ; 
but the non-canal Counties were overwhelmed by the vote of 
the two terminal 'cities, l^ufl'alo and New York.^ 

• « 

Of Mr, Shelton’s monograph, which was, he says, prepared 
as a Master’s thesis at the University of Chicago, and is a study 
of the traffic probleun only, little need be said,. It is a most 
careful piece of work, and should be of great value locally as a 
contribution to the study of the onie definite project with which 
it deals, a canal* to connect Chicago with the Mississippi. 
Her(? are figures more eloquent than any words. In forty years 
tl^e total river tonnage dealt vviMi at St. Louis, the junction 
of the Mississippi and the Missouri, has fallen from 1,600,000 
tons to 191,000 ^ons. In the same period the rail tonnage has 
grown from 3,258,000 tons to 51,700,000. And the Mississippi 

^ The present writer happened to be in New York when this vote was taken, and 
was assured that the officials of the New York Central Railroad had all voted for it, 
the reason being that they were satisfied that, while the Cancal during construction 
could bring them a good deHl of traffic, the Oanal when constructed would never 
subtract any. 

Figures as to the existing Erie Canal have been recently published by ihe Bureau 
of Railway Economics (Bulletin No. 21). — In 1909 the actual cost of transportation 
paid by the trader was 2 mills per ton mile. But each ton carried one miio cost the 
taxpayer in ad.dition 6 *06 mills for capital, and 1*55 mills for maintenance. The 
total cost per ton mile was therefore 8*61 mills. The total charge made by the 
competing railway companies per ton-mile ranged between G*1 mills and 7*4 mills. 


has a miaimtiin 8 ft. channel jfill the way from St. Louis to 
New Orleans; while both that river and the Missouri are 
navigable for many hundreds of miles above thoir junction. If 
such has been the fate of the Father of Waters in competition 
with a modern railroad, it is really hardly worth discussing the 
prospect of success of some puny artificial waterway. 

W. M. Acwobth 

Die Wirtschafilichcn Grundla^en des Modernen Zeitungswesens. 
By Or. Max Garr. (Vienna and Leipzig : Franz Deuticke. 
1912. Pp. 79. 3 mk.) 

Die DeiitscJien Buhnen und ihre Angehbrigen. By Dr. Char- 
lotte h^NOEL Reimers. (Leipzig : Duncker k Humblot. 
1911. Pp. xix + 772. 15 mk.) 

The industrial activities of Germany have become self-con- 
scious, and economic inquiries into every sort of enterprise and 
almost every kind of occupation ix)ur from the German Press. 
The modern newspaper and the theatrical profession are the 
subject of two recent investigations. These works differ widely 
in scope and purpose, but both concern activities and achieve- 
ments which Germany holds in high esteem. For all that con- 
cerns letters the German has a veneration unmatched in any 
country ; for the stage he cherifeh(‘8 an enthusiasm which it is 
almost impossible for us to unclerstand. The Press is but a poor 
relation of literature, yet the journalist of Vienna or Berlin is a 
person of consequence, whose influence is not limited to the 
pulling of strings behind the scenes. The stage may everywhere 
be invested with a certain glamour, it no doubt appeals to some- 
thing in the youth of every nation. But in German-speaking 
countries it has its roots deep dowm in the national life, it meets 
some need which is part of the national chara(\ter. The author 
of the Deutschen Buhnen claims, not without justification, that 
the Germans are the true Theaiervolk. The Latin ‘races only 
ask to be amused ; the Puritan susceptibilities of the British remain 
apprehensive, even w^here they have ceased to be offended. But 
for the German the call of the theatre is, irresistible, and never 
fails to meet with an eager, enthusiastic res|)onse. The enquiry 
undertaken by Dr. Keiniers throw^s a searching light into many 
dark corners, and spares neither criticism nor suggestion. Its 
main object is to furnish that theoretic basis which the prudent 
German never omits as a preliminary to proposed legislation. 

The author of the Gnindlagen des Modernen Zeitungs- 



wesens has no special gospel ind no immediate practical end 
to serve. The journalist, like other men, must live, but this 
volume is not concerned with his general claim or his special 
difficulties. Nor are the ideal mission or the true function of 
newspapers brought into the discussion. Dr. Garr aims only 
at providing a fohndatioii of economic facts and figures to server 
for the guidance of, and perhaps for a check upon, such specula- 
tion. The facts are not likely to be palatable. The modern news- 
paper, with its huge machinery £oi« production and distribution, 
its dependence on costly telegraphic and oihei agencies, is essen- 
tially u coinmcrcial enterpri-.^. Moreovi i, the major portion 
of the cost of production is borne by acivertisements. This 
is a posit^^n from hieh nothing can save as, and any attempt 
to make thi\ Press independent of coinuuTcial elements is fore- 
doomed to faV.arc. 

The autlUii- is considerably hampered in bis woiic by the un- 
willingness ^>f owners and editors to disclose any facts touching on 
Wieir finances. Even the balance sli^'ets of Joint Stock Com- 
panies cor^rivo to wrap up their essential features in a mist of 
vaguenesjg iihd bbscurity. Two Vienna papers did, indeed, furnish 
figuireg' on the understanding that their incognito would be re- 
sj’'OTed, but only the social-democratic Vorwliris appeared to 
"ha V£, nothing to conceal. A trustworthy authority fixes the capital 
required to start a newspaper in a German towm of 150,000 in- 
habitants at £10,000. The enter}5rise may eventually yield a 
return of 20 to 25 per cent., wuth the attendant risk of complete 
financial disaster at any moment. Even these figures, the writer 
points out, are smaH compared wdth the £300,000 sunk in the 
Tribune, or the £600,000 required to bring a INew^ York daily into 
existence. The fame of the sum wdiich Mr. Harmsworth, in his 
own picturesque language, “dropped* in two days over the Daily 
Mirrar'' has evidently not penetrated to Germany. 

The 'advertisements stand to the editorial matter of a Berlin 
newspaper ip the proportion of, roughly, 34 : 60 per cent. In 
French papers the relation is 27 : 73, but in France the editorial 
text is very accessible — to put it politely — to the advertiser. This 
dependence on advertise^nent, i.c., the fact that the selling price 
of the paper does not meet the cost of production , leads the writer 
to the paradoxical c'^i^i^*liision that after a certain point has been 
reached any increase in ttie circulation can only be a disadvantage, 
and he quotes a bon-rnot of the famous editor, August Zang : 

“ Every new subscriber is an enemy.” The ideal circulation would 
seem to be the minimum that will satisfy the advertisers, — a 


position which involves an errolieous assumption of rigidity in 
the world of advertisement. 

It is true that the German newspaper, with its endless supple- 
ments, is a very bulky article, costly to produce. A leading Vienna 
daily consists of 60 pages on weekdays, 128 pages on Sundays, and 
216 on holidays. 70,000 copies make up the daily edition, but on 
Sundays and holidays the ampler leisure of the population creates 
a demand for 120,000 copies. The profit on a weekday issue 
amounts to 6,040 kronen, on t. Sunday edition to 9,269, but on holi- 
days it falls to 1 ,652. It is clear that the size and circulation of the 
Sunday issue represent the limit of profitable expansion. After 
this point has been reached profits sink rapidly, and if all circum- 
stances were taken into consideration, might vanish ^^Itogether. 
The writer, how^ever, overlooks the fact that the holidf'y number-- 
it might almost be called the holiday volume— adds to the popu- 
larity of the paper, and takes a prominent j>art in the unceasing 
w\arfare w^hich every pai)er must wage with its comp "/titors. 

On the subject of advertisement agents the wTiter is frankly 
pessimistic. The battle is to the strong — and unscrupulous. The 
agent makes enormous profits, but his methods do not investi- 
gation. The purely commercial character of the f’r(-?h‘S, tTi?ifn^riter 
concludes, is injurious to the public welfare. He deplores the fre- 
quency wdth wdiich papers change bands, and the conseejuent'' 
facility with which contributors must needs change view^s. ^he 
public in its infrequent philosophic mouKmts complains, but does 
not appear to realise its own responsibilities. For the newspaper 
only exists to give the public what it w’^ants, and the only hope 
for the future lies in the progressive political and educational ad- 
vancement of the masses. A State Press would, in the opinion 
of Dr. Garr, be a monstrosity, and even a State-subsidised Press 
would not be economic-ally 1‘easible. This is a point on w^hich 
fuller discussion would have been of great interest, and it is to 
be regretted that the writ(‘r states the problenf only to dismiss it. 

For the author of the [Jcuischen Buhnen und ihre^Angehorigen 
there is no such open question. The stage is for her, as it was 
for Joseph II. of Austria, a powerful Instrument for the education 
of the public taste and the improvement of public morals. It 
follows that the cost cannot be compfited by purely businesl^f 
standards. The theatre cannot fulfil its mission without subsidy 
from the State or town ; therefore ^liis subsidy must be forth- 
coming. The whole volume is a stirring, if somewhat lengthy, 
human document. Enquiries were sent to 237 theatres in 182 
towns, and each paj>ei contained 140 general and^ 34 ‘'personaF’ 




questions. Altogether 2,000 replies were received, and the writer 
claims that, with but a few exceptions, all the questions were 
answered with evident ca^e, sometimes with passionate eagerness. 
As the theatrical calling engages pome 22,000 persons, this material 
cannot claim to be exhaustive. But inasmuch as the replies 
emanate from e^^ry theatre of any consequence, and embrace 
every known grade of employee, every character to be found 
in opera, tragedy, comedy or farce, they may fairly be regarded 
as representative of the profession. ♦ 

And the tale -to be gathered i ’ one of t:‘agedy unsurpassed by 
any record of sweated industry we .have yet seen. It would 
appear that the G-errnan actor is the hurdest w’orked, nxost 
poorly paid, and thf most unjustly treated of all mankind. He 
is incredibly overtaske^i. Tlie Hiiccession of rehearsal arid per- 
formance that 'uake up his working day would tax the strongest 
constitution to t)reiikiTig point, ai'd yet these are varied by addi- 
tional performances in neighbouring places, which involve night 
Jfjarneys and even later hours. Th(; number of plays w^hich a 
novice is expected to master is calculated to ruin the most willing 
memory, and mar his chances at the outset. The pay compares 
unfavourably with the earnings of manual labour. The hygienic 
conditions of all but half-a-dozen of the newest theatres are un- 
speal^hle. And finally the actor is at the mercy of a contract 
which binds him, body and soul, to his employer. Unfavourable 
conditions of employment constitute* a hardship in any case, but 
everything conspires to make them a special burden, to the actor. 
For he is always, in temperament at any rate, an artist, with 
unbounded enthusiasm for his calling, with a pathetic eagerness 
to work, to succeed, to excel. The nature of his calling imposes 
a special tax on every faculty, for the actor can never afford to 
relax. Nothing is ever really achieved, for no triumph survives 
the night, and success has to be captured afresh in the morning. 
In these* circumstances a certain measure of comfort, leisure, and 
freedom fronq immediate care w^ould seem essential, but the actor’s 
life is nothing but a record of anxiety, privation, and toil. 

The reader who has grasped the fact that out of 2,000 Cases 
investigated only 404 earn over £100 a year, while over 800 
incomes range from £15 to £50, proceeds to read, almost with 
"Incredulity, of the expenses involved in the earning of this pittance. 
The actor finds his own clothes, — a serious item in the case of 
women , who dare not appear in the same frock for two different 
parts, and may be called on for a fresh part every two or three 

No. 89*— VOL. XXIII. 



days throughout the season. Lien are provided with historical 
costumes when required, but actresses have to provide even these, 
and frequently devote to dressmaking the hours that are sadly 
needed for rest and sleep. Travelling is another serious item, for 
all theatres close for the summer, and the members of the company 
are driven to seek summer engagements in watering places, per- 
haps halfw^ay across the face of the continent. And lastly, there 
is the inevitable middleman, the agent who takes a steady 5 per 
cent, of the actor’s salary throughout the whole length of the 
engagement he has helped to secure. 

But it is, perhaps, the insecurity of tenure which constitutes 
the worst grievance in the actor’s life. The Director of a theatre 
reserves to himself, by the terms of the contract, a series of 
exclusive rights. He may terminate the engagement, where the 
contract is for five years, at the end of the first or second year, 
where the contract is for one season only, at the end of the first 
month. By this tihie all companies are made up, and the victim 
of this one-sided form of contract has no chance of another en- 
gagement for at least a year, and no option but to starve. Further, 
the Director has the right to keep on his company for a few 
extra weeks at the end of the season, if he chooses, so that no 
member dares to make a new engagement for the weeks succeeding 
the term of his contract. The tyranny of the one-sided cr'nlract,' 
according to which the employer is never bound, and the employee 
never free, is illustrated by numerous instances. 

But the \^Titcr points out, in all fairness, that the Director 
is in some respects almost as much the victim of circumstances as 
his employees. The competition among theatres for the public 
favour is as keen as that among actors* and the Director must 
at all costs attract to his company anrf keep what “stars ” he can. 
The stars make their owm terms, and the salaries w^hich they 
command must be saved eisewhei;e. Since the demand for luxury 
in the appointments of the theatre and for pertection in technical 
detail increases apace, while the price of seats cannot be raised, 
the only quarter where savings can be effected is the salary of 
the smaller folk. Tliere remains the subsidy, which in the majority 
of town theatres lies in the hands of the Theatre Committee of the 
municipal authority. The Director is as much at the mercy of 
this Committee as the individual actor is at the mercy of his 
employer. The Committee interfere in details of management, 
may demand the production of certain plays, veto the production 
of others, may even insist on the dismissal of a particular actor. 
Worse than all this, they may at any moment term^ate the 


contract with their lessee, on tlik ground '‘that the interest of 
the theatre” demands such a change. For the Director, the 
sudden termination of the contract probably means the forced sale 
^ jat an enormous sacrifice of his entire equipment — in short, com- 
plete ruin. 

A nation whi<?h has only recently entrusted its municipal 
authorities with so comparatively uncontrovr^rsiai a business as 
education, will listen with sympathy to the plea that the inter- 
ference of the municipality in any out the financial side of an 
artistic enterprise must be intoleruble. A telling instance is quoted 
of a member of the Committee who insisted on tlie production in 
his own provincial city, of a ]>lay which had specially appealed 
to him in the tondei mood induced by an exquisite supper in 
Berlin. The play was not suited to the temper of the piovincial 
audience ; it war not within the capacities of the caste. Yet the 
Director was obliged to acquiesce, againjst his better judgment, 
and earn a liarco, which did not endear him to his own Committee. 
^ A more equitable lavr of the theatie. for in the matter of 
contract, of general conditions and of liability to accident the 
theatrical profession lies outside the common law, w^ould seem 
to be an immediate and crying need. Such a law has been drafted 
by the Association of*German actors, at whose instance the whole 
enqui ry w as undertaken, and Dr. JReimers criticises the demands 
of the Association with impartiality. Some of them she regards 
as exaggerated and likely to defeat their own ends. On the other 
hand, there is nothing exaggerated in the claim that Sunday 
rehearsals, when there are already two performances on that day, 
and any night rehearsals, which are held after the evening per- 
formance, should be abolished. The regulation of Sunday labour 
and of night work for women has been proved feasible in other 
occupations — it should not be impossiblS here. The exclusive rights 
given by theatrical contracts to the, employer constitute as flagrant 
an injustice as ever* found its way into a Statute book. They 
should be abolished. The actor is peculiarly liable to accident ; 
he should not be excluded from the ordinary law of compensation. 

The only bright spot in tKe present situation is the inclusion 
of the actor in the new i^cheme of compulsory insurance. The 
law which ordains that every employee who earns no more than 
iilOO a year shall come within the old-age pension scheme, while 
everyone who earns less than £125 shall be liable for sickness 
insurance, has removed the two worst rocks in the actor’s path. 

For the rest, nothing can save theatres from the consequence 
of cut-throat competition with each other, or actors from the 

H 2 


disasters of the mad rush that ^overcrowds the profession. Con- 
cessions for the opening of new theatres are granted with incredible 
recklessness, and obstacles only seem to attract capitalists to 
madder ventures. Stage-stricken young persons of both sexes ate 
encouraged by unscrupulous teachers, often indeed actors who 
seek to add to their insufficient earnings by feaching their craft 
to fresh victims. 

To the student of German economics nothing is more signi- 
ficant than the discouragement apparent in the writings of the 
majority of those who investigate the existing economic structure 
of society. Some, like the author of the Grundlagen des Modernen 
Zeitungswesens, hope, with the courage of despair, for an appar- 
ently spontaneous improvement in the tastes and habits of man- 
kind. Dr. Eeimers pins her faith to definite reforms, which shall 
bring the theatrical proletariat into line with the other classes 
who have already felt the benefits of social reform. But the 
panacea for our feal ills, the remedy which shall deal wdth the 
monster of competition, is yet to seek. The most varied economic 
investigations converge upon a single point, and everywhere, 
below the surface, we can detect the stirrings of the same dis- 
content. The newspapers, the theatres, and this trade and that 
industry, — all would appear to make an increasingly precarious 
living, none are free from the reproach of exploitation. ^^^TJiere is 
hardly an author who does not foreshadow a condemnation of the 
existing order, a question* whether individualism, even fettered 
and restricted as it is, has not seen its day. 

H. Eeinherz 

Les Bases economiques de la Justice internationale. By 

Achille Loria. PubiicatioDs de ITnstitut-Nobel norvegien. 

(London : Williams and Norgate. 1912.) 

The title of Professor Loria’s work might be * taken as 
indicating a treatise on international law in its relation to inter- 
national trade. But its scope is much wider, and might perhaps 
be best indicated by some such English translation of the title 
as this : “ The Operation of Economi 9 Factors in the Evolution 
of International Society” — since Professor Loria uses “Inter- 
national Justice ” in the larger general sense, and not in the 
more special juridical one. The book is thus of interest, not 
merely to lawyers and economists, but equally to the much 
larger public interested in the development of a science, or a 
philosophy, of international relationship. The needs of Europaan 


society will surely develop such science, drawing freely upon 
such existing divisions of study as law, politics, economics ; just 
as certain other social nevjds have developed such new divisions 
of knowledge as genetics ; which h^ve been built up by drawing 
freely upon and combining pre-existing divisions. 

In the library of such science — which has hardly as yet pro- 
gressed as far as possessing an exact terjninolog> — this book will 
take high rank, mainly by reason o^its orderly classification of 
a wide range of facts showing the part th^t trade and industry 
have played in the development, not merely of political and 
constitutioral forms, but of and moral conceptions, such 

as religious toleration. Tie whole book is, indeed, a very clear 
demonstration of the truth that it is impossible to separate the 
economic from the moral and emotional developments of mankind 
— a demonstrslion which, in view of certain cortemptuous 
criticisms commonly levelled at the more recent efforts to show 
„g^sound economic basis for international cb-operation, most 
certainly needs to be made. 

But Professor Loria will be read more for his facts than for 
the conclusions which his book enables us to draw. In the 
statement of his case he has adopted the lollowing method : He 
enumerates in one chapter those factors which favour the 
establi^toient of law and religious toleration — organised society, 
in fact — and in the next those which operate to destroy them ; 
or, taking the same factor, shows in one chapter how it operates 
to the development, and in the next how it operates to the 
destruction of those thingi^\ It will readily be understood how 
such a method is well adapted to show clearly the isolated action 
of each particular factor, but ill adapted to show the net result 
of the totality of the factors. And the matter is in no way 
men^d when we get a third chapter entitled “Les Eapports 
^conomiques r6tablissent partiell^rnent I’organisation juridique 
internationale,” and*a fourth entitled “Les Eapports ^conomiques 
r6tablissent integralement le Droit internationale ” ! 

The diflS^culty, moreover, of this method is accentuated by 
' the arrangement of the boolc. There is no table of contents, 
no analysis of chapters, ip index, no differences of type to dis- 
tinguish the author’s statements from passages which he cites 
and criticises, and the footnotes, instead of being at the bottom 
of the respective pages, are lumped together at the end of the 
book. These are trifles, perhaps, but they -are trifles which have 
made many books, which might be lucid and coherent, positively 
maddening to read. 



Moreover, such a method makes Professor Loria*s book a 
particularly difficult one to criticise. Thus, in the chapter headed 
“Les rapports economiques detruisent Torganisation juridique 
internationale,** the thesis of which seems to be (p. 30) that war 
‘*eclate toujours comme une r^ation contre la ]:>ais8e du revenu,” 
occurs the following passage : — 

“La guerre de Cuba n’est qu’un produit du declin dii revenu 
des fabriquants de sucre [imericains. La guerre du Transvaal 
est I’oeuvre des financiers et des sp^culateurs de mines d'or, qui 
esp^rent pouvoir tirer de grands avantages d*ime excursion 
militaire dans I’Afrique aiistrale. Mais ces vell^ites des 
financiers hritanniques sont a leur tour excittes par la baisse 
inqui^tante dn revenu anglais. La guerre russo-japonaise est 
un produit du declin de I’assiette ^conomique de la Russie et 
par consequent de la baisse de son revenu, qui la pousse k la 
relever grace a des expansions et des annexions violentes en 
Asie tandis que de son cote le revenu japanois a Tetroit dans les 
limites nationales, vent a tout prix s’etendre par rex])ortatioh 
et par la colonisation de la Coree voisine et de la Mandchoiirie. 
La guerre actuelle de la France contre le Maroc a uniqucment 
pour but de contraindre cette region a faire des frais, qu’elle ne 
pourra supporter sans recourir k im emprunt qui engraisaera 
les banquiers fran^ais. Que dirai-je de plus? Aujoucd^’biii le"' 
germe eVune guerie possible est tout entier dans la rivaltd 
^conornique de 1’ Alleniagne et de rAngleterrc. L’Angleterre 
n’arbore le nouvel imf>erialismc de Chamberlain que le jour oh 
elle sent menacce par I’Allemagnef sa supr4matie dans les 
industries textiles et metallurgique>^ ; dԤ.utre part la politique 
mondiaJe de Guillaume IT. aiontre que Tunique but de Taction 
germanique est Tabaissement de la puissance commerciale 
anglaise. Les politiciens des deux pays, qui repr(!‘sentent la 
classe des oommer^ants, et.occupent aiijourd’hui partout le 
pouvoir, sont convaincus que leur patrie '^est destinVe k une 
regression inevitable si elle ne triomphe pas de sqn rivale. Les 
unionistes anglais, comme les lib^raux ou les radicaux partisans 
de Texpansion qui soutiennent Asquith, sont pr^cisement une 
Emanation des commer^ants : ils rev^nt de nouveaux marches 
et de nouveaux clients. De merne les nationalistes lib^raux et 
les libdraux dc^nocrates alleraands, avec la National Zeitung 
k leur tete, ne sont que les d^l^gu^s poiitiques des industriels 
de la Prusse Rh^nare et de la Westphalie.” 

If this is intended as a partial statement to be read in con- 
junction with a parallel partial statement of the opposite case in 
the next or preceding f^-hapter, criticism is, of course', disarmed. 


But if it is intended as a complete and impartial summary of 
the whole of the factors or the determining factors of the conflicts 
enumerated, it is quite obviously imperfect. To represent the 
Spanish-American War or the Eoer War as the outcome merely 
of financial intrigue is to ignore certain outstanding facts 
which cannot be '^ignored if we are to have any just notion of ' 
the processes of war-making. In fact, one can «iay that, in the 
case of the Anglo-German conflict for instance, merchants and 
financiers as a whole fully realise its futility, and are throwing 
their influence against its precij itation, while huge sections of 
the public, who are unaware of possessing aiiy interest in the 
conflict at all. are throwing the influence of their excitability 
and temper on the side of conflict. Your honest roaring jingo, 
who is so great and dangerous a factor in the precipitation of 
these conflicts, has, foi the most part, no earthly private interest 
to serve by tlie war which his general influence may at times 
render inevitable. His action is due to genuine hatred or fears 
%ased upon false conceptions of the relationship of foreign 
nations to his own. He may think, like Lord Eoberts, that 
foreign trade is a matter, not of having things to sell, but of 
having power to exercise against someone else ; or he may 
conceive of foreign trade as a fixed quantity which we “fake” 
from cue another as the balance of power drifts from one to the 
other; or of all nations as struggling economic units, rival 
business firms, the gain of one being the loss of the other — one 
could go on reciting indefinitely the sort of picture which is 
evidently in the jingo mind, and which necessarily and logically 
sets up the hostility, hatred and funk which play so large a rdle 
in bringing about international conflicts. These things may have 
their origin partly in economic conceptions, but are psycho- 
logkially distinct. To represent the conflicts enumerated by 
Professor Loria as the direct outcome of financial intrigues 
reminds ’one of the Chinese Socialist who lays down certain 
doctrines concerning the relation of cholera to the Capitalistic 
system. The story runs that a Chinese Coffin Trust, in the 
interest of its dividends, had bribed a provincial governor to 
suspend sanitary arrang|ments during an outbreak of cholera — 
“Plain proof,” argued the Socialist in question, “that cholera 
is a Capitalistic interest, and will never be successfully dealt 
with until we have abolished the Capitalistic state.” 

The most powerful economic forces of our time are those 
which operate unseen and unnoticed by those subject to them, 
and which escape conscious political control. It is not the result 
of any coliscious policy of government which has German 




industry so largely dependent, directly and indirectly, upon 
foreign capital ; or which has caused France to furnish so large 
a part of the financial sinews of war for German industrial 
development. The great economic forces of the world are the 
resultant of isolated individual acts, no one of which is taken 
with the object of bringing about the result which in conjunction 
with others of a like kind it finally achieves. All of which 
means, not that the econonyc causes of war are not the chief 
causes — they almost certainly are — but that those causes often 
act not directly or consciously at all, but indirectly, and irrespec- 
tive of the conscious volition of Governments. 

There are, indeed, two main facts in the economic develop- 
ment of the world which have the most direct bearing upon 
the problem of international conflict, and with neither of which 
Professor Loria deals, unless it be by casual references, in this 
book. The first of these facts is the complex division of labour, 
which, despite tariffs and protectionist devices, has made the 
economic unit something quite distinct from the political unit. 
Since the frontiers no longer coincide, political power has become 
largely irrelevant to economic ends. The second fact is that 
the linking of telegraphic communication to our credit system has 
made of the industrial world an economic organism endowed 
with sensory nerves, by means of wdiich any appreciable dt piage 
to one part is instantaneously felt by the other parts, and which 
sets up therefore a co-ordination of pohcy which mast finally 
end in the cessation of conflicts between tfie varioas pajis of 
the same organism. These are iht Ovdstandmg facts of n^ern 
industrial and financial dev<^dopment, and ih^'^ oiics perhaps which 
bear most directly upon international poli«.y. It to be hoped 
that an author so v/ell equip])ed to show their operation as 
Professor Loria vill turn hfs attention to them in the future. 
Meanwhile we may rejoice that the general conclusion which 
Professor Loria himself draws seems to be indicated ‘in the 
following passage : — 

“Si le dcveloppement snivi jusqu’ici par les rapports 
economiques et par les rapports jufidiques internationaux, qui 
easont derives, permet quelques previsions sur leur dcveloppe- 
ment h veiiir, on peut facilenumt prc^.sager qu’avec le progrfes 
ulterieiir des rapports economiques, les guerres deviendront de 
plus en plus rares et qu’elles finiront par disparaitre com- 

Ainsi soit il ! 

Norman Angef,l. 




Theorie der wirUchaftlichen Entwicklung. By Dr. J. 
Schumpeter. Pp. viii + 648.^ (Leipzig: Duncker und 
Humblot, J912.) 

Dr. Schumpeter’s book, although it covers a great part of the 
field usually covered by economic manuals, is not one itself ; ^it 
is rather, as he himself puts it in his introduction, the develop- 
ment of one furdamental idea, whic^ underlies most of his work. 
He does not set up this idea in opposition to the work of his 
predecessors ; on the contrary, he considers it a further, necessary 
development, and lakes much pains to fit it into the existing 
frame. This frame is given in the first chapter, which is both 
an introduction to his own work and an interesting and con- 
scientious survey of ('ontinental as well as of English and 
American ec\momic literature. Tn it we see foreshadowed the 
outlines of his own work. 

Economists, he holds, have hitherto dealt alm(;st exclusively 
with problem3 of a static society ; their teachings are explanations 
of its phenomena. The idea of a static society in no way excludes 
either the incidents of ‘'economic friction,” or development whi^i 
merely preserves the equilibrium; thus, e.g. development in pro- 
portion to the grow^ih of population does not destroy the static 
chari^^ter of society; it is mere readjustment, not progress. 

But there is according to Dv. Schumpeter such a thing as 
spontaneous, economic development, development due to new 
combinations in economic life, to constructive economic leader- 
ship. At the present time we are so accustomed to the 
phenomena of changg that we are only too inclined to forget that 
anything else is possible ; that there might be a state in which 
economic life would be one series of uniform cyclers, rhythmically 
repeating themselves, one state of static equilibrium. That it is 
not so is due to the entrepreneur^ the man of action, the originator 
of new systems, wiiich if successful enter as component parts into 
the circulatoi:y flow of economic life. His action and work cannot 
be explained by the hedonistic rules of the usual homo 
econotnicus ; he forms a type by himself. 

The essential featur| of his action is the attempt to increase 
the eiSficiency of production (in the widest sense) through an 
improved use of the means at his disposal. If he succeeds, he 
obtains a surplus. Hoping to achieve this surplus, he is able to 
pay a premium to those who will give him the command of the 
required means. To give him this command is the task of “credit.” 
The payment for this command is “interest.” Interest can be 


paid, because there will be the surplus out of which it can be 
paid. In a static society there would be no such surplus ; in a 
state of perfect equilibrium the value of the product is the sum 
of the values of the means by which it is produced. Prof. v. 
Bohm-Bawerk sees in “time-preference” th^ factor which 
(besides the incidents of economic friction— always understood) 
causes the divergence of these values. Dr. Schumpeter asks : 
is the preference given to pi*esent as against future values the 
direct effect of independent psychological factors, or do we value 
present values higher, because we are able to retain them to a 
future date and still draw incomes from them? His answer is 
that in a static society there would be no reason to give this 
general preference to present values : the rule would be equality 
of both. In the existence of economic development Dr. 
Schumpeter sees the one great reason why preference is given to 
present values. 

Dr. Schumpeter does not merely throw out his idea ; he follows 
out its necessary consequences ; he surveys from his new point of 
view our existing ideas of various economic phenomena. He 
devotes an interesting, though lengthy, chapter to the nature of 
economic crises, and shows that besides the crises which are due to 
disturbances originating outside the sphere of economic life, there 
is a category due to the very nature of economic developn»ent. 
Economic development works interm Itlentlv ; innovati.'Uis in 
different branches of econo^nic activity follow one another in rapid 
succession. Each burst of this cdiaract-er necessitates n r>eriod of 
readjustment, of “statisation : this process gives {he impression 
of a backwash, sometimes it may beccane au acute crisis. It is 
impossible in a short review^ to deal wdth the numerous ramifica- 
tions of the author’s work ; still more, to enJorse or criticise them. 
All we can say is that Dr. Schumpeter does not shun any amouht 
of trouble to make ius wwk complete; that he is very fair and 
very conscientious; that he grapples with all kinds ol possible 
objections. Even too much so ; he often answers possible 
questions, which if asked are better left unanswered. He is not 
satisfied with presenting to us his building, he presents us with 
all the scaffolding which he has used, ani takes us over all the 
paths he has trodden. This, combined with frequent repetition, 
makes his book cumbrous. The reader, who could not under- 
stand him if half the explanations were omitted, will hardly wade 
through the work in its present condition. Still no one who takes 
a real and thorough interest in economics ought to pass it by. 

L. B. Naymier 



Die gemischt privaten und dffentlichen Unternehmungen auf dem 
Gebiete der Elektrizitdts^ uhd Gasversorgung und des 
Strassenbahnweseas, By De. Bichard Pas sow. (Jena : 
Gustav Fischer. 1912. Pp. vi + 220. 6 marks.) 


This book contains an interesting and detailed account '"of 
what is probably the most recent phase of municipal trading in 
Germany, viz., the holding of shar^ in, and the representation on 
the directorate of, electricity, gas, and tramv/ay companies by local 
authorities. This movement curing the last few j^ears appears to 
have succeeded an earlier one in favour of municipalising public 
utility services. The new development is ascribed by the author 
partly to the recognition by local authorities of some of the diffi- 
culties associated with municipal management of trading under- 
takings, an(i partly to the technical and economic desirability of 
electricity, gas, and tramway undertakings conducting their 
operations over large areas, which generally •embrace the districts 
of several local authorities. Although a large area of operations 
may be secured by one municipality t’-ading outside its boundaries, 
or by the establishment of some form of joint board by the 
various authorities concerned, in practice it is not always possible 
to secure the necessary agreement amongst a number of local 
autl orities whose interests may conflict. In some cases munici- 
palities realising the need for extending their area of operations 
have actually leased their trading undertakings to private com- 
panies; a striking instance is that of Konigsberg, which in 1910 
so leased its electricity and tramway undertakings. More fre- 
quently municipalities have sold their works to companies, or have 
undertaken to buy gas or electricity in bulk from companies, in 
which they are themselves shareholders, e.g., Darmstadt has 
disposed of its electricity and tramway undertakings to such a 
company, which owns also th^ suburban lines ; and Cologne has 
recently entered* into an arrangement to buy temporarily some, 
and ultimately all, of its current from another similarly constituted 
company. In other cases a local authority has preferred to 
purchase shares in a company supplying a public utility service in 
its area, rather than lluy up the whole undertaking; Strassburg, 
for example, has bought a majority of the shares in both the local 
tramway and the local electricity companies. Where a local 
authority purchases shares in a company, it is generally brought 
about by agreement with the private firms and individuals who 
are shareholders; the local authority does not necessarily secure 
either a majority of the shares or a right to nominate a majority 




of the directors* In some cases several local authorities are share- 
holders in the same company. Dr. Passow is of the opinion that 
more of these joint public and private enterprises are likely to 
be established in the immediate future, although he expresses 
some doubt as to the permanency of this form^of organisation. 
In several cases the local authorities have secured the right to 
buy out the private shareholders on agreed terms, and in at 
least one case have already doije so. 

This type of municipal trading is almost unknown in this 
country ; it is, however, deserving of the most careful considera- 
tion, and Dr. Passow’s book may be recommended as providing 
a very convenient means of studying the question. 

Douglas Knoop 

La (fcstion par VEtat et les mnnicipalHes. By Yves Gityot. 

(Paris: Felix Alcan. 1913. Pp. viii + 437. Bfr. 50c.) 

This book deals With national and municipal trading of many 
kinds in many countries, but it can make no claim to be a scientific 
study of the subject. The author has collected figures and state- 
ments of various kinds from a variety of sources, and seeks to 
show that it is undesirable that the State or the municipalities 
should do anything which can be done by private enterprise. 
The book appears to have been produced in a great hurry ; it 
contains numerous slips and mistakes; the figures and Rtau^ment'^ 
are not always correct, and some of them appear to bo ^relevant ; 
the sources from which much of the material is t alien are by no 
means authoritative. A few oxaiiijdeb may be given In one 
list of English towns (p. 130) eleven ol forty-seven, 
and in another list (p. 144) four out of twenty-four are spelt 
wrongly. On p. 24 we read that the London water companies were 
purchased by the Metropolitan Water Board for 47,500,000 fran^)^ 
(? £) ; on p. 151 tiiat the ix)pulation of Liverpool is 75,900 
(1911 census : 746,506), and that the popiuatioil of Manchester 
is 865,900 (1911 census: 714,427); and on p. 162- that the 
population of Salford is 102,000 (1911 census : 231,380). One 
statement (p. 123) by M. Guyot is that British municipal gas 
works are exempted from taxation, whereal, as a matter of fact, 
they pay rates and taxes like any gas company. Another state- 
ment (p. 62), referring to the Prussian State Railways, is that 
the Government in 1907 imposed a tax on railway tickets and 
abolished return tickets. The tax, in reality, was an Imperial, not 
a Prussian, tax. The author goes on to state that in this way the 
first-class fares were raised by 44 per cent., the second-clasfi by 25 



per cent. , and the third-class by 16*8 per cent. The facts are these : 
Prior to 1907 the fare for single tickets (by slow train) wasSpf. per 
klm. first-class, 6 pf. second-class, and 4 pf. third-class; and the 
fare for return tickets was half as much again. After the abolition 
of return ticket^ #e single faru (by slow train) became 7 pf. per 
klm. first-class, 4*6 pf. second-class, and 3 pf. third-class. ]B*)th 
before and after the change somewhat higher fares had to be paid 
to travel by eypress trains. How fsi, Guyot obtained his figures 
showing the percentage of increase in fares is a mystery, as the 
ticket tax is not sufficient to account for them. On p. 140 appears 
the statcDjent that the London County Council made no provision 
for the depreciation of ilie tramway undertaking in 1910-11, 
whereas they actually set aside something like £130,000 for this 
purpose. On p. 226 tlie following statement, made on the 
authority o" a newspaper report of a sjxjech at a congress of Post 
Office employees, appears without any comment : “The Post 
Office Savings Bank [of the United Kingdom] loses £100,000 
annually on account of bad administration and bad investments.” 
Amongst the matters which, to the reviewer at least, appear to be 
irrelevant may be mentioned the reference (p. 277) to the estimate 
of the Naval Intelligence Department in 1909 as to the number 
of Dreadnoughts Germany would have in 1912, and the lengthy 
discussion (pp. 409-414) of the action of the United States Senate 
with regard to that clause in the Hay-Pauncefote Treaty which 
deals with the Panama Canal toll§. 

The author has sought to make his book conclusive by 
embracing in it references to many countries and a great variety 
of undertakings; ^s a consequence, his treatment of any one 
country and of any one industry is far from comprehensive. If 
a more judicious selection had been made of the material, if 
greater reliance had been placed oif first-hand authorities, if more 
care had been taken in checking the accuracy of the figures and 
statenients, and* if the matter had been presented in a more 
systematic .manner, the case against municipal and national 
trading could have been stated in a way which would have carried 
far more conviction. 

Douglas Knoop 

Die Unternehmungsfornien. Von Professor Dr. E. Liefmann. 

(Stuttgart: E. H. Moritz. Pp. viii + 216. Price 2.50 


This work is a companion volume to a treatise on Kartelle 
und TtusU, by the same author and publisher, and forms m 




introdaction to the study of the position and developmental 
tendencies of business undertakings in the present state of indus- 
trial society. It is intended for the business man and general 
reader rather than for the professed economist, and fully serves 
its purpose as a guide to the problems of organiplion which will 
come up for solution in the near future. While it is necessarily 
not comprehensive enough to contain all the material required 
for the complete weighing pf all the considerations affecting 
these problems, there are few points of importance left entirely 
undiscussed. Naturally, it is chiefly intended for the German 
reader, but the English reader will find it very useful precisely 
on account of those differences in German methods of organisa- 
tion with which he is little familiar in English systems. For 
this reason ii is to be ho])ed that an English translation will soon 
appear. Dr. Liefrnann is well-known to economists fcr his 
excellent studies of the development of kartells, and the business 
man whose attention is not restricted merely to the happenings 
within his own counting house will find it to his advantage to 
follow the example of the academic persons whom he too fre- 
quently despises. 

The book is divided into four parts : a lucid sketch of the 
development from home industry to the injSustrial undertaking 
of to-day, a discussion of the joint-stock company and its results, 
a survey of co-operation, and a brief account of publich-owncd 
undertakings and their limitations. The second section claims 
most of our attention. The joint-idock company has proved an 
excellent means for collecting capital foi mating it mobile, for 
spreading risk, and for distributing i)ropert y. ^ Bui as investment 
grows, so, too, does unearned income A wealth-owning class 
thus finds it easy to maintain itself )n possession, especially 
where limitation of the family prevails. The latter practice is, 
in Dr. Liefrnann ’s opinion, closely related to the desire for an 
income derived not from personal exertion but from investment. 
He holds that management of companies by paid olBcJals either 
may impair that spirit of enterprise on which industry has been 
built up, or, as in the case of banks, may lead to recklessness. 
The part played by banks in German i^idustry is much more 
direct and important than the equivalent part played by British 
banks. This is mainly due to the German company law which 
requires that before a company can begin operations the whole 
capital must have been subscribed, and that atjeast one-quarter 
of the amount payable in ca;:h must have been received. Usually, 
therefore, the promoters take up^all the capital and issue it to 



the public at a later date. This need of a greater initial command 
over money has lad to the develop|rent of Efiektenbanken, or 
banks which either as the whole or as' a part of their business 
devote themselves to the financing of company* promoting. To 
accept short-tern^ deposits and lo make loans or investments 
for longer periods is an offence against strict banking ; but, oif 
the other hand, German banks work with a larger capital of their 
own than do English banks. SubsrUjuently, the banks issue to 
the public the shares in the companies they have established, or 
retain a part of the capital the iiselves. German investors rely 
much on their banks, and readily take up the stocks thej issue. 
Either in their own interests or in those of their investor-clients, 
German banks maintain a close connection with the companies 
they promote and secure tepresentation on the boards of directors. 

This close interlacing of finance and industry is characteristic 
of Germany, and it leads to the furthering of all plans for the 
cessation of competition and the increase of profits, especially 
by such methods as the community of interests through mutual 
stock-holdings, common directors, holding companies, &c. The 
same ends are attained in the United States through the agency 
of powerful individual financiers, but in Germany the holding 
companies are of dominant importance, especially in light rail- 
ways end the electrical industries. Closely connected with the 
mobilisation of capital through the joint-stock system is specula- 
tion in industrial shares on the stock exchange. WeU;;known 
evils result, but, on the other hand, it is claimed that this 
speculation leads to an equalisation of the prices of goods, an 
assertion which Dr.tLiefmann does not accept. These new 
developments of the company system require further legislative 
attention, especially, in the author’s opinion, in the direction of 
greS-ter publicity and more effective audit. 

The co-operative system has, developed in different directions 
in Britain and Germany. In the former country the co-opera- 
tive idea came into activity after Hie industrial revolution, when 
there was a large factory population, and realised itself in distri- 
butive stores for the aivkntage of the workers. In Germany, 
while the small-scale style of industry was still the rule, co- 
operation came in to assist the small master against the lar^ 
factory by means of credit banks, &c. Co-operation has, in DrI 
Liefmann’s view, reached its fullest development, and is now 
apt to lead to a reduction of the spirit of individual initiative and 
to the standardisation of demand ; these opinions seem 
eiaggerated* i 




Space does not permit of an examination of the aijthor’s 
views on State-conducted industry. He regards nationalisation 
as a remedy for the evils of private ownership which is only 
operative within narrow limits. The participation of the State in 
the coal -mining and potash industries of Gerigiany he considers 
to be in no way successful. As a rule other methods of control 
should be sought when it is necessary to counteract the effects of 
private monopoly. t 

These somewhat disconnected references will perhaps serve 
as an indication of the topics which Dr. Liefmann discusses. 
Merely lo enumerate them all would much oiitpass the limits 
permissible for thi.s notice. 

Henry W. Macbosty 

Lectures on British Commerce, including Finance, Insurance,, and Industry. By The Bight Hon. Frederick 
Huth J.yckson (and others). With a Preface by The Hon.<' 
W. Pember Beeves, Director of the London School of 
Economics. (London; Pitman. 1912. Pp. xvi.-t-279.) 

The International Society for the Promotion of Commercial 
Education is apparently a development from the German associa- 
tion of the same name, of which Dr. Stegemann, of Brunswick, 
has for some years been President. The International Society, 
like th^ German association, desires to embrace within its range 
of activities all varieties and grades of comrcerciRl education; 
but its membership, as a maiiteii^of fact, consists, T believe, 
preponderatingly of representatives of cominercial boys’ schools, 
and of commercial academies of the older type , and its Central 
Committee does not this year — nor did it in a recent year for 
which I happen lo have a rSport — include a single representative 
of these great Handelshochschulen which have come into existence 
in Germany during the last fifteen ^ears, op of the American 
Universities, which have done equaHy great things, though in 
a somewhat different way, for conlmercial education of the 
highest type. 

The Society arranges for a three weeks’ summer school each 
ttar in some business centre. That at H|ivre, for instance, in 1909 
Hinught together an audience of 144, of'whom the great majority 
were teachers in commercial schools, not men themselves looking 
forward to a business career. Thus, of 48 from Germany 22 were 
teachers, of 24 from Au.stria 14, of 46 from Switzerland as many 
as 38, and all 7 from Hungary. Three ^;^renchmen only wete 

1913] HUTH JA-CKSOK: lbctxtbbs on bbitish oommerob 113 

present ; mi it pretty obvious from the report that the first 
ooncern of most of those attending ^the lectures was to improve 
their knowledge of the language of the country they were visiting. 

It is possible that this state of affairs was not altogether present 
to the minds of the authorities of the London School of Economics 
when they invifced the Society to hold its 1912 meeting in Londdn ; 
otherwise they would ha\e been satisfied with the attendance 
of 203 persons “mostly fiom tl.e Corftment/’ and would not have 
been disappointed at the presence of “so few Englishmen.*’ 
Many of those present had i leir expenses paid by their own 
governmeiits and schools. Mr. Beeves, in his Preface, remarks 
that “it would he well foi English County Councils, Chambers 
of Commerce, &c., to oiler similar encouragement to their picked 
students.” But this i-. already being done by several education 
authorities io\ teacheis of languages in their areas ; and doubtless 
teachers in conimerc»al s(*hools are as eligible ps others. Certainly 
more could profitably be done in this dire(‘fioQ. We are still 
quite absurdly insular in this country ; and if half the teachers 
of “Commercial French” or “Comme^'cial Geiman” in evening 
classes could be given an opportunity to go to P'rance or Germany 
for three weeks, it would do them a great deal of good— and 
possibly some little good to British trade. But we need not over- 
estimate the example we are asked to follow. 

Of the lectures given in London t^n are printed in the present 
volume. The first is on the Bank of England, by Mr. Frederick 
Huth Jackson. It shows how all is for the best in the best of 
all possible banking systems. Then follows one by Dr. Armitage- 
Smith on the British System of Taxation. It indicates, not 
obscurely, to the benighted foreigner how superior is the British 
system of taxation for revenue only — with the not insignificant 
exception of the taxes on alcohol — to the sort of thing they ought 
to be groaning under in their jown countries. Incidentally it 
expounds* Adam Smith’s canons in a free- trade sense which 
had not occurred to the master. When Smith spoke of the 
desirability of “certainty,” he at any rale w^as not thinking of 
the “real incidence” of | import duties. Next comes a lecture 
on Postal Organisation, which contains some interesting bits oi 
information, but also a large quantity of quite uninstructW 
detail : like the table of the London staff and their scales of pay, 
with entries such as this : — 

Scales of Pay Total. 

Une&tablished Assistant Inspector | Various 1 

^ of Messengers ) 

No, 89— VOL. xxin. 




Of differtot Mr. Douglas Owein^s lectures on 

London at a Port, and on the Machinery of Marine Insurance ; 
two well- written sketches, which will set a siudent thinking. 
Much the same may be said about Mr. Barling on British 
Shipping. It is amusing to see how afraid the lecturer is to 
speak quite frankly in favour of shipping combines. The rebate 
system certainly rules out ascertain measure of competition — but 
the position of the shipowner is at least deserving of recognition,” 
(fee. The humour of the situation is that while everybody in 
Bmgland ytill does lip service to Competition, everyone whose 
lousiness inakes it his interest to combine is now hard at work 
^^laobiaing. Mr. Bisgood’s two lectures on Life and Fire and 
...her more modern forms of Insurance also have form and move- 
ment; and perhaps their matter is rather more novel. It is 
interesting to notice the tendency towards amalgamation in 
insurance business,^ and the practical control of the whole of the 
fire insurance business obtained by the Fire Offices’ Committee 
or ” Tariff.” The lecturer becomes positively amusing when he 
describes the methods of “industrial” insurance. Accordijpig to 
Mr. Bisgood, the £4,000 subscribed capital of the Prudential has 
been raised to a present capital of .£1,000,000 solely by appropria- 
tions from profits, and last year it paid £550,000 to its share- 
holders. This is probably unparalleled ; but it is this sort of 
thing, on a lesser scale, v/hich makes it so difficult to ascertain 
statistically the rate of profit. The next lecture, on the Coal 
Industry, is platitudinous; and, coming from the Editor of the 
Colliery Guardian, rather disappointing. The coal miners will 
take note of the observation jis to wages boaAls, that the admission 
of “the principle that other factors, besides selling prices, such 
as trade prospects, the volut^e of trade, ^c., may be introduced in 
settling the wage rate” “has operated in the long run to *the 
advantage of the workmen.” But one would like to know what 
is really meant by a sage-sounding utte»'ance* like this : “Those 
who may be best trusted to form an estimate are agreed in 
believing that ... a permanent rise in the price of fuel may be 
looked for as soon as a revival in the demand places the balance 
of power in the hands of the trade.” There is much virtue in 
“as soon as.” 

An outline by Mr. Graham of the various branches of the 
Woollen and Worsted Industries completes the series. 

In his Preface. Mr. Beeves thus expresses himself: — 

“It is a mistake to think that we are indifferent on the question 
of comuiercial education in England. The leading men in 

iWS] matata; la wSglame 116 

is 1 < 

industrial and commereial affairs are keenly and anxiously 
interested. Bi^t they have not yet decided What type of education 
is required, t/et us fnist they will do so before long. When 
the young man who wishes to ent^ business knows that a certain 
definite type of education is required, he will not be backward 
in getting that education.’* ^ 

My experience, I am afraid, is^ less ^.encouraging than Mr. 
Reeves’s. I hdbve come across very few leading men who can be 
called “keenly and anxiously interested” without a straining ot 
language. A few, very few, ace really keen, though many are 
vaguely dissatisfied with ^hmg^. as they are. It is hopeless (I 
cannot help thinking) to expect the business world itself ever to 
“decide what tyjXi of education is required.” Those of us who 
are in charge of Scb(K>is of Economics and Faculties of Commerce 
have the task laid upon us of translating the inart’oulate desires 
of the businesn woild into systematic intellectual disciplines. 
And 1 cannot but regret that Mr. Reeves should have employed, 
even within marks of quotation, the term “business-getter” to 
describe the product we are to aim at. In a sense, of course, 
every efficient business man is a “business-getter.” But the term 
owes its present vogue to a rather cheap sort of “business 
magazine,” which identifies commercial ability with adroit adver- 
tising and seductive correspondence. These have their place ; 
but their present prominence in such magazines is due chiefly 
to the fact that they are the easiest things for the “business 
journalist” to write about amusingly. 

W. J. Ashley 

La Reclame. By Victor Mataja. (Edition Pol-Moss. 1912. 

< 2 fr.) • 

The significance of the present pamphlet lies in the fact that 
it is by the pen of a distinguished Austrian jurist, who in 1910 
published a serious work on “Advertising” in general, which 
has had a large vogue on the Continent of Europe. The present 
study suffers from severd compression of material to an extent 
which almost destroys the logical significance of the concrete 
teaching which it is the author’s aim to impress on his readers. 

Another handicap to its wide acceptance in this country lies 
in the fact that it is addressed to the author’s fellow-countrymen, 
who have not yet reached the same level of enterprise and 
progressive methods in business which are the current standard 
among western communities. Various principles are enunciated 

X a 




and iwraciices enjoined which in this country ere methods so 
well known that they are on the point of being replaced. The 
most useful lessons which he has to inculcate are drawn chiefly 
from American experience, gtill he throws due weight <ai one 
or two principles which, though well known, are often forgotten 
among us; such as, that it is at present more difficult to sell 
a commodity than to manu^facture it (p. 14) ; that the effect of 
very extensive advertising is to make known not only the qualities, 
but the defects of any commodity with startling rapidity (p. 22) ; 
that the special influence of psychology on advertising is critically 
important (p. 30, 31) ; that the cumulative effect of good adver- 
tising makes the results achieved by it advance in geometrical 
progression (p. 39) ; that the manufacturer maintains touch with 
the consumer only through a long chain of intermediaries (p. 48) ; 
and finally, which is the keynote of the book, that no advertising 
will secure a permanent sale for what is not wanted by the 
public (p. 52). 

G. Binney Dibblee 

Experiments in Industrial Organisation. By Edwabd Cadbxjby, 
with a Preface l)y Professor \V, J. Ashley. (Longmans, 
Green and Co. 1912. Pp. 296.) 

Mr. Cadbury’s volume contains a detailed and extremely 
interesting account of the various forms of welfare woric which 
are in operation at the Bournville cocoa and chocolate factory. 
We have all, of course, long been aware of the general character 
of what his firm has endeavoured to do tSr its workpeople, and 
have been ready to join in the tribute of admiration which 
Professor Ashley, in his introductory Preface, pays to their 
active sense of social duty. I doubt, however, if many, even of 
those who have had the privilege of personally, visiting 
Bournville, have hitherto fully realised how great an amount of 
thought and care must have been expended in the development 
of the various arrangemeufs, organisations and institutions which 
are now flourishing there. I shall not ittempt in this review any 
enumeration of them or any summary of Mr. Cadbury’s book. 
To appreciate what is being done one needs, not an outline, but 
the detail to be found in the book itself. The underlying spirit, 
however, is well shown in a small rule on a matter of minor 
importance : “The names of a few girl employees, who suffer 
from weak heart, etc. , are sent by the doctor to the Girls’ Works 
Committee, and these girls are allowed to leave their workrooms 



five minutes before the usual time of closing, both at the dinner- 
hour and in the evening, in order Jhat they may avoid the rush 
which is inevitable when thousands are leaving work” (p. 96). 
A trifie this, no doubt, but a trjfle indicative of much ! Mr. 
Cadbury’s book contains a few references to general questions-;^ 
hoW far an employer, in establishing institutions, should nlhke 
them special to his works or generaj to his town or village, and 
so forth — but practically the whole of it consists m a simple 
and direct account of -the work of the firm. To students whose 
interest in economics is bound up with an interest in bettering 
social life, i< cannot be recommeuded too stiongly. For in it they 
will find set out an expuiple of what Dr. Marshall nas taught 
us to regard as a great need of the age — true economic chivalry. 

A. C. PiGOU 

Medical Bmefit in Germany end Dinmark. • By I G. Gibbon, 

B.A , D.So. (London : V. S. King & Son. 1912. Pp. 

XV + 296. Price 6s. net.) 

In this book Mr. Gibbon mainlains, and even increases, the 
reputation which he already possessed as an authority on this 
subject. Compared with his previous work on Unemployment 
Insurance, this one seems to be the better of the two. For it 
possesses to the full the many merits of the earlier book, and, 
in addition, is decidedly the more readable. As before, Mr. 
Gibbon is most happy in his selection both of subject-matter 
and treatment. He has limited his inquiries to two countries 
which form an admirable contrast to one another. For Germany 
has a compulsory, and Denmark a voluntary, system. The work- 
ing of the two, therefore, can be contrasted, and a very interesting 
contrast it is. Moreover, in each of them the system of insurance 
is more widely extended than elsewhere. It is a pity, however, 
that at tile end a diapter has not been devoted to a general com- 
parison of the workings of the two systems, summing up what 
has been stbid about them in the body of the book. 

The general method «f treatment is of the same character as 
that adopted in Unemployment Insurance. The subject is divided 
into five chief sections, dealing respectively with choice of 
medical practitioners, their remuneration, control of medical 
service, medical and surgical requirements, and institutional 
benefit. Finally, there is a short chapter on insurance and 
pubjic health authorities, and a longer one of general conclu- 
sions, summarising the detailed verdicts which he has given in 




connection with each branch of the subject. Every section has 
three chapteis devoted to it : — the first describing and criticising 
the policy and practice of Germany, the second thosife of Denmark, 
and the third giving the conclusions of the author, which are 
discussed at greater or less length according to their importance. 
Upon the chief subjects of controversy in Great Britain at the 
present time, such as free ^choice of doctor and payment by 
capitation fee or by visit, the experience of Germany and Denmark 
is most illuminating. Mention should also be made of the eleven 
interesting appendices which are by no means the least valuable 
part of the book. 

Mr. Gibbon's conclusions must carry great weight. He is 
no blind partisan of insurance, and recognises to the full 
the undesirable results to which it may lead. Of these, 
deliberate malingering is by no means the worst; nor is it even, 
in Mr. Gibbon’s view, a very considerable evil. Possibly 
he is too sanguine on this point; but he is probably right 
in regarding valetudinarianism as a more serious danger. This, 
he says, the very existence of insurance is likely to encourage by 
putting medical treatment and remedies within easy reach of the 
patients, unless the societies and the insurance authorities gener- 
ally take definite steps for the ediHiation of insured persoiiis, and 
not least in relation to the principles of every-day health and 
hygiene. For instance : “T^at insurance scheme which proposes 
simply to treat sickness ’s not likel\ to achieve very g^'eat ^>enefit. 
Whatever success it may at+ain. it may, liuless wise precautions 
are taken, sow almost as rriauy. if not more, evils than it removes.*’ 

This is one of the reasons why tb'i auth'^t j>roposes to combine 
insurance with payment by the individ'^ai person of part, though 
only a small part, of the cost of medical service and requirements. 
He regards this as one of ttie best guarantees against contiriual 
resort to drugs and the doctor, and a ixdicy of this kind would do 
much to dispel one of tlie best-founded apprehensions of "the pro- 
fession. The proposal could, in his view, best be carried out by 
a system of deposit. For the organisation of the medical service 
he looks to the gradual grow^th, in lother countries besides 
Germany and Denmark, of corporations of doctors which will deal 
for the profession as a whfile with the societies, and within which 
free choice could be given to the insured persons. The general 
employment of full-time salaried officers is not recommended so 
far as siclmess insurance is concerned, except as a protection 
against unreasonable demands. For many reasons it is preferred 
in the case of invalidity benefit. To a limited extent, however, 



■ V:/ , % ' 

qualified practitioners outside the society might be given the right 
to treat insured persons. This: system seems a very different one 
^from that established in this country, but with good management 
the panels should in time develop into corporations of the kind 
proposed by Mr. Gibbon. 

As' regards remuneration, payment for the whole body^ ot’ 
insured persons should be made by a fixed capitation fee, whilst 
that of the indhidual doctor should be according to. services ren- 
dered — that is to say, the number of visits, ^consultations, 
operations, and so forth. Indeed, in Germany, where this system 
frequently prevails, the scale of charges is often fixed by an official 
tariff drawn up by the (Government. The use of this method 
involves the existence oi a corporation of doctors, to whom the 
total amount of the fees is paid over by the societies, and distri- 
buted among the various doctors accc^rding to work done. They 
themselves can be tn^.steci to guard against the abuse of the method 
on the part of individuals. Space will not perhiit mention of the 
many other interesting proposals of the book. I need only add 
that the criticism ^throughout is keen and able, and, above all, 
fair ; and probably the final form of any system of insurance will 
be not far different from that suggested by Mr. Gibbon. 

N. B. Dearle 

Seasonal Trades, By various writeil3. Edite.^ by Sidney Webb 
and Arnold Freeman. (London : Constable and Co. 1912. 
Pp. xi + 410.) 

The various studies in this book were made in connection with 
Mr. Sidney Webb’s seminar at the London School of Economics, 
and it is plain from the quality of the 'work that the members of 
the* seminar profited much more from researching under direction 
than the^ would have done from attending many lectures. 

In his introdifbtory remarks Mr. Webb postulates “as an 
economic hypothesis to be tested . . . that there is, in the United 
Kingdom of to-day, no seasonal slackness in the community as a 
whole.” The hypothesis !s hardly borne out by the facts, though 
an enormous amount of seasonal unemployment cancels out 
theoretically, so to speak. It is questionable whether in a world 
broken up by climatic seasons the residuum would disappear 
even if all the facts could be taken into account. The truth of the 
proposition that at every time of the year there is employment 
for every efficient person at some wage is theoretically unassail- 
able, of course ; but this is quite another matter. However, from 




the evidefice brought forward in tbi^ book and ekewhere^ it is 
evident that*.the actual residuum is immensely greater than the 
theoretical one ; and this is a thing to be explained. 

In order fully to grasp the problem of seasonal employment, it 
is needful to examine closely the elements of seasonality and their 
co-ordination, as well as the absence of their co-ordination, in the 
world’s work. Inherent seasonality is extraordinarily common in 
w^ork, and it has been rendered more common by specialisation. 
But the great mass of it, by a system of dovetailing, has been pre- 
vented from causing seasonal unemployment. In the light of 
experience it is arguable that it has been one of the tasks of 
industrial organisation to escape the losses caused by a system 
of periodic dismissal and re-enyiloyment of labour, and secure 
the economies of specialisation without increasing these losses. 
Organisation to this end has not, as a rule, failed where it is 
calculated to pay the organiser substantially ; but it has failed 
where the gain is not individualised. Thus, within many indus- 
tries w^e find dovetailing of seasonal tasks, but not as between 
different industries. So, to use a very technical example, the 
fitting together of jieriodic demands for labour inter-industrially 
(as it may be expressed in a word) is lacking just for the same 
reason that the equalising ol marginal returns inter-industrially 
is lacking (that is, the equalising of collective marginal returns). 
There are no inter-mdiistrial interests : ali interests aie intra- 
industrial. Consequently, tlie setting-up ol an inler-irdustrial 
agency or authority (such as a labour exchange) is essential, if 
seasonal unemployment is to be minimised Jt is not reasonable 
to expect labour, m a w^orld in which it i^oiinally functions exe- 
cutively under direction, to evolve ellxtive seU -organisation as 
the regular thing. Moreover, it is to be added that, even intra- 
industrially, the dovetailing of seasonality is largely wanting Mn 
the case of low-grade laboni for the satxie kind of reason, namely, 
that it pajs the organiser inadequately. • 

For this envisagement of the problem much evidence will be 
found in the book before us, and much other matter relevant to 
it. The trades examined are the tailoring trade in London, the 
trade of the waiter, the cycle industry, the gas industry, , the 
London millinery trade, the skin and fur trades, the boot and shoe 
trade, and the building trade. The case of the waiter is admirably 
analysed by Mrs. Drake. It :s shown that ‘*in the hotel or 
restaurant open only for a few months in the year, the practice 
for two or more separate establishments to be under the control 
of a single management/* so that one fashionable season may be 



(Jovetailed mto aiiother, since “tl\e su(3ce$s of a fashionable hotel 
or restaurant made or marlred ^he quality of the personnel ’* 
(of the waiters)* and in this way a permanent staff of waiters may 
be kept. In short, there extensis^e and costly inter-indus- 
trial organisation for the purpose of dovetailing seasonality 
because it pays. As a result pf this and of the mobility qS fne 
migratory waiter* “the waiter who ^caters foi the most seasonal 
class in many ways suffers least from seasonal causes. “ Inci- 
dentally, it is interestijig to learn that “tip” means T.I.P. (to 
improve promptness). The nost complete study in the book is 
Mr. Popploweirs, which ha.^. nioreover, the merit (from the point 
of view of the realistic economist) of containing much valuable 
information about the economics of the gas industry apart from , 
its seasonal features. \s regards seasonality, the deg'*ee of which 
has docliiieu owing to the i^rodnctive use of gas, its cause, we 
learn, is that prodi’ction and consumption must go hand in hand ; 
and the latter, of course, is greatest m the whiter. But yardmen 
are busiest in the summer; consequently, soiiKithing has been 
done to cancel out seasonality by putting some retort-house opera- 
tives into the yard as spring comes on. Another method of 
reducing the damage caused to the business by discontinuity of 
work is, it appears, to shorten the shift in retort-houses in the 
sum ner. This plan has been tried at some works with marked 
success. It is significant that, to a noticeable extent, the seasonal 
variation of employment in brick-making and gas-working, w^hich 
were inversely related, got to be informally and loosely fitted 
together; but, with the transformation of brick-making into a 
machine industry, the jointing gave w^ay. Consequently, most 
periodically employed gas-workers to-day have to fill in their time 
with casual jobs of the disorganised kind. 

* The fur trade, which appears ’to contain a large unsolved 
problem of seasonal unemployment, is another of the occupations 
treated in the book about which little information has been pub- 
lished elsewhere in an accessible form. Miss Bourat’s mono- 
graph, which covers the ground to some extent historically, is, 
therefore, doubly welcome. Of the many notable points in other 
essays the limits of space prevent any discussion. 

The detailed inquiries are introciuced by Miss Poyntz in a 
lengthy essay on general lines. It is suggestive and thoughtful on 
the whole, and reveals acquaintance with the facts, but it 
ocxxasionally irritates by undue depreciation of the classical 
economists and “orthodox” theory, and by bias. It is not 
sufficient, in noticing the Majority Eeport of the Poor Law Com- 




mission with regard to unemployment merely to repeat the 
Minority Report^s pronouncement that it is “even more inade- 
quate and reactionary than with regard to the Poor Law/^ 
Again, it seems to the reviewer as unfair to allege that “the 
Manchester School (which is taken to include Adam Smith and 
Ricardo) regards with blind optimism the sufferings of the victims 
of their (sic!) system,” as it is incorrect to say that Marx's “idea 
of the importance of the reserves of labour as a source of unem- 
ployment, though much amplified and corrected since the time of 
Marx, still forms the keynote of the best analysis of the subject.** 
Miss Poyntz’s failure to apjireciate that correction has altered 
Marx's theory out of recognition becomes comprehensible when 
we find her attributing much unemployment to “the necessity 
(under the competitive system) for the maintenance of reserves 
to meet all fluctuations.” But we all have our obsessions. 

S. J. Chapman 

Die Formen deft wirlschaflUcJicn KnmpjcH. ]^y G. ScnwiTTAU. 

(Berlin : Julius Springer. 1912. Pp. 'iOO. Price 12 marks.) 

Rome excellent work is, as we know, being done by Russian 
economists. The name of Turgan-Baranowski, for example, has 
long been associated with the theory of crises, and his are not the 
only researches that are of first-rate importance. The latest study 
that comes from Russia is true to the best traditions of scholar- 
ship in that country. It is from the ])en of one of its younger 
scholars, J)r. Rchwittau, who is a lecturer at the University of 
St. Petersburg. He has taken industrial coiiflicts as his theme, 
and the fullness of his treatment deserves the highest praise. 

We like his methodology : the book has been carefully planned 
and as carefully executed. Jhdustriol conflict at once raises the 
question, Conflicts between whom? Between social classes, must 
be the answer. But what constitutes a social class? The author 
goes very thoroughly into the subject, tracing the history of the 
concept as far as one can from the Physiocrats and Adam Smith to 
Seligman and Nicholson, and, of course^ to Karl Marx. Inci- 
dentally, Dr. Schwittau calls attention to the difference in the 
8tandix)int of the Physiocrats and of Adam Smith in regard to 
social classes. The former divided society into groups from 
the point of view of production, while the English writer in his 
scheme based the analysis on distribution. Altogether this part 
of the volume shows a mastery of the subject, and should prove 
very useful as a summary of doctrine. 



All this introductory matter, but withal very necessary for 
a proper understanding of the main i^sue of the book — a study of 
strikes — to which fully a third of the space is devoted. Nor is any 
aspect of the subject overlooked. The psychology underlying 
strikes, the organisation of ^strikes, the practice of picketing, what 
the law thinks about industrial conflicts, and much more that Is 
germane, — all receive attention. But the most interesting section 
is that which deals with strike statistics. Dr. Schwifctau is quite 
emphatic in his declaration that the German method of collecting 
materials is far inferior to the ^.nglish. The Board of Trade has 
special Labour corresjiondeuis vhose busiiiess this very important 
work is ; in Germany it is placed in the hands of the local police. 
Further comment is needless from the point of view of exact 
statistics. As for the ideal system of strike figures , Dr. Schwittau 
suggests a B. beme which should find general support. To begin 
with, there soould be a clear delimitation of the strike unit — 
either the area affected, or the industry concerned, or the par- 
ticular business or factory where the trouble prevails. In any 
event, it should be perfectly plain. Next in imj;x)rtance is the 
duration of the strike. In England, for example, no statistics 
are compiled about strikes that last a shorter f)eriod than a day, 
though in America even strikes of such brief length are noted and 
consiiered (since 1901). As for the number of strikers, a few 
accompanying facts should always be^given — e.g,, sex, and whether 
organised workers are concerned or not. The length of the con- 
flict is, of course, a necessary fact ; so is the cause of the strike, 
and last, not least, what the results were — a question manifestly 
difficult to determine! It w’ould be a boon to economic science 
all over the world if it were possible to come to some agreement 
about one general method of collecting and publishing strike 

An interesting accompaniment of the grow^th of trade union 
influence is the resort to the boycott and the institution of the 
label, two topics which have not hitherto received much attention. 
Dr. Schwittau treats of both very fully, giving not only a descrip- 
tion of each, but also a consideration of their effectiveness. Both 
in England and in Germany the label is not so w^ell-known as in 
America. In England opinion among trade unionists seems to be 
divided upon the subject. Nevertheless, the trade union label is 
to be found in this country ; we have ourselves eaten bread which 
bore a label attesting that the baker was a good trade union man. 

A thorough treatment of industrial disputes must take cog- 
nisance of the organisation of both sides. This Dr. Schwittau 


does. His study of masters’ orgaiuuatio^is is no less thorough 
than that of the men’s. Finally, he devotes a good chapter 
tq the settlement of disputes, and this particular section is 
distinguished by the illustrations drawn from the experience of 
Victoria, New Zealand, and Canada, dn the rest of the book the 
author limits himself to the conditions prevalent in England, 
O-ermany, and the United States, conditions which, so far as the 
first two countries are concerned, he has studied at first hand on 
the spot. For the third he has had to rely on printed material, 
but so wide has his net been that he has swept in pretty well 
everything of significance. 

Tins leads us to the last remark as to literature generally. 
No less than thirty jiages are needed to give a list of the sources to 
which the author has referred. We may say that it will form a 
worthy adjunct to the excellent bibliography in Webb’s History 
of Trade Unionism, including as it does works m four languages 
(English, French, ' Gei man, and Eussian) The book was 
written originally in Russian (1910), and was then translated into 
German (1912). The translator has perfotraed his task satis- 
factorily enough, but there are numeious printer's errors which 
should be removed in the next edition. We cannot give a com- 
plete list, but such small slips as Geoige 111. without the initial 
capital, Weeb, or Ben Tilled, should certainly bt avoided. 


Industrial Warfare: the Aims and ('hums of Capital and Labour. 

By Chakles W'Itxf'v and Jami:s a |jirrLE. (London: 

John Murray 1912 Pp xt353 Price 6 s net.) 

We like almost everything about th s excellent book exc^t 
the title. Industrial Warfare does not give at all a correct idea 
of its contents, and, apart from, this, we cannot help thinking 
that the sooner the practice of siieaking of industrial disputes in 
terms of war is abandoned, the better. The strike is not a state 
of w’ar, neithex is a lock-out. The sub-title. The Aims and 
Clams of Capital and Labour, however, teally explains the scope 
and object of the book, and seems much more satisfactory. As 
the preface states, “Despite the universality of interest in the 
Labour movement, there does not appear to exist any epitome 
which may explain to the ordinary reader the exact significance 
and the probabilities of th'* growing unrest. With that primary 
object the authors have compiled this volume, though they 
venture to hope that even the student, the politician, and the 

1918r) : mBtrstcusut- wabi^abb 126 

etpestt may welcome risurhi in encyclopaedio form which may 
usefully mipplemen| the more detailed and specialised literature 
of the various aspects the whole question*’ (p, v). This plan 
has been carried out very successfully. The book is, of course, 
almost entirely descriptive, and the authors have contented them^- 
selves for the most part with a bare statement of facts, abstain- 
ing, except in one or two places, fro|n any argument or criticism. 
Generally speaking, what little criticism there is appears emi- 
nently sane,, the view taken in the Intiodiietion of the causes 
of labour unrest. The aims and aspirations cf both employers and 
employed are very clearly and laiily explained, the information 
given is well arranged and put into very readable form, and the 
book is, as far as we are able to ]udge, remarkably accurate. 

The main body oi the book consists of ien chapters, vi-xv 
inclusive, wKi ‘h deal with the relations of labour ‘"nd capital in 
most of our mdustries. They contain information as to the 
amount of capital involved, the profits obtained, the wages 
earned, the hours of labour, &c., in th particular industry under 
discussion ; while a careful account of the causes which have led 
to recent disputes, as well as of the way in which these disputes 
have been conducted, is given in the chapters dealing, e,g , with 
the railways, transport workeis, and mines. At the end of each 
of these chapters dealing with particular trades there are a few 
paragraphs which may perhaps he described as a sort of industrial 
Who's Who, giving a short account of the princi])al tiade union 
leaders, as well as of the leading figures amongst the employers. 
Besides these chapters, the book contains amongst other things 
a good statement ot the views of the employers, of labour, and 
of the public respectively, as to the remedies for labour unrest, 
ajgood account of the extent of co-partnership and profit-sharing 
in industry, and a useful statement and explanation of legal 
rulings, especially in connection with trade unions. 

Satisfactory afe the book undoubtedly is on the whole, there 
are one or two weak points, slips, and omissions, which may be 
noticed. We cannot agree with the authors when they say “a 
general increase in the' price of commodities rarely affects the 
very poor” (p. 7), or “there has not been much increase in the 
actual cost of living in recent years ” (p. 280) Nor do we think 
it is tru9 to say that trade unionism is now reconciled to co- 
partnership (p. 238). Surely more than 884,291 trade unionists 
were represented at the Congress in 1912 (p. 23), and why is 
th^re no mention of the Children Act of 1908 in the summary of 
labour legislation (ch. xxi)? These are, however, defects which 




shonW not detract greatly from the usefulness of the book, which 
ought to do something towards removing the many prejudices 
and misunderstandings prevailing among the working classes with 
regard to the position of employers in industrial qaestions, as well 
as the strange and widespread misconceptions which still exist 
among other classes as to the aims and aspirations of labour. 

H. Sanderson Fueniss 

Provincial and Local Taxation in Canada. By Solomon 
Vtnbbero, Ph.D. Columbia University Studies in Political 
Science, No. PJ8. (Longmans Green and Co., and P. S. 
King and Son, 1912. Pp. 171. Price $1.50.) 

The medley of existing taxes in C’anada, comprising at once 
the most primitive and the most advanced forms, can only be 
properly explained in relation to geographical and historical con- 
ditions, and to constitutional development. Ur. Vineberg has 
carried out the task with great care and thoroughness, reducing 
a chaotic mass of detail into intelligible order and interesting 
form. The hopeless laihire of tlie personal property tax is well 
distinguished from the similar situation m the T'nited States by 
the comparative ease and raj>idi1y of ihe movement towards 
reform rendered possible by the absence of such constitutional 
restrictions as make progress so difficx-lt in that country. An 
interesting point that is well made is the dynamic influence of this 
tax in discouraging the giow’th )f tlistributmg centres * Vvmnipeg 
abandoned it and reaped tlie advantage of jrjer present economic 
position, while Nova Scotia and Bruiiswick are “growing 

restive under a system which gives ar advantage to their com- 
petitors in Quebec and Ontario, “ the latter giving the tax ^up 
chiefly through agitation based upon a similar grievance. Busi- 
nesses which do not carry large 8tcck^ but w^hich haye large 
annual returns are, of course, unduly favoured*. 

In his ideas of reform for the business tax, corporation tax, 
and other imposts, Ur. Vineberg sees always the complete income 
tax, but it IS always “not yet“ — “a sdnse of public morality” 
and perfection of administrative machinery must first be 
developed. As an improvement upon the present business taxes 
he suggests a system which is not an income tax, but which is to 
yield the same results — a presumptive form scientifically deter- 
mined. In each class of business the ratios borne by the rental 
value (of premises occupied) to profits are to be sampled and 
averaged. It is presumed that a well-defined mode is anticipated, 



rather than an average. The result will be ip index number 
applicable to all rente in the eam^ business, so that a tax may 
be levied upon the ren*, thus weighted, to give a result like a tax 
on promts. If businesses tend lo similarity in size, are so narrowly 
distributed geographically that the pure economic surplus ip 
rental value hardly varies, present stable results in relation to the 
time-element, and also have little scrpe toi the personal element, 
such a presumptive system may give a rough approximation. But 
on our side we are ^ruck tuitb the idea of taxing cotton profits or 
a financial agent’s income on Liiesej lines' That an inquisitonal 
income tax is objfctionah'r ()t''ause it nial'os it “impossible to 
conceal a lean year,’’ wcild also be a somewhat refieshing point 
of view for our officials. The Canadian jirobl-un is bound up with 
the necessity foi central co-ordination and conference, for the 
scientific elab«)ration of corporation taxes, and for '■dministrative 
arrangemet.ts to prevent overlapjung and duplication. “Let 
benefit enter in to designate the authority fo which the tax is 
to be paid, while ability shall determii'-'' the amount payable,” Is 
the author’s wise saying, and Hs force iS by no means limited to 
the problems of the West. 

J. C. Stamp 

Les Finances Otiomancs. By A. TTuthborn. (Vienna and 
Leipzig; C. W. Stern. 1912 Pp 295.) 

This ambitious Realise on public law and adrainistiution in 
the Ottoman Empire is planned in four volumes, of which the 
above is the second, dealing with Finance. The first has already 
won golden opinions for ios comprehensiveness ; it treated of the 
sources and principles of Turkish legislation, of the head of the 
State, of nationality, and of justice. Let it be said at once that 
its companion vohime is in no respect behind the first in the 
minuteness of its details. One would have expected a book of 
this kind to be a little dull. Headers will hardly find this to be 
the case throughout, for the historic notes on the different sorts 
of taxes, and the general comments on their effects, serve, here 
and there, as a welcome contrast to the facts and figures which 
the pages contain. Nevertheless, when all is said, the book is 
for the specialist, and he will find it invaluable. 

In a country where there is a Government , but only a minimum 
of government (for as long as the provinces pay their taxes 
regularly the central power is very slack), a consideration of the 


^ If 

fiuAijoes of the State cannot but be of groat interest to the poU- 
tioiftn and the l^onomist. The first thing that strikes the reader 
of M. Heidborn’s pages is the wastefulness in the collection of 
revenue. No less than twenty-^e separate offices were con- 
cerned in gathering in the income of the State, and the*amount 
of leakage on the way may be well imagined. Gradually, how- 
ever, as Turkey came more ^nd more into contact with the modern 
European State-system, Turkish administration took on a new 
aspect. It was so in justice, in education ,'*'in finance. And at 
the present moment the finances are managed by two independent 
bodies, (1) the Council of the Administration of Public Debt, 
established in 1881, and (2) the Ministry of Finance. The latter 
is in a hojieless state of chronic bankruptcy, and though the new 
regime of 1908-9 did, indeed, attempt to improve matters, in a 
land like Turkey improvements are slow of realisation. One of 
the wisest provisions of the reforms was the establishment of a 
School of Finance ‘in 1910 for the education of Treasury officials. 
Another step in the right direction was the mstitution of a budget 
on modern lines, wherein the items are classified in the most 
approved method of the best German text-books on Public 
Finance. Glance at the last two or three budgets and you will 
find the revenue of the State dnided into eight sources: direct 
taxes, including tithes; stamp dues: mdiiect taxes; monopolies; 
State undertakings; State domains; (nlmtc (from Egypt, Cyprus, 
Samos, and Mt. Athos) : and ni'scellaneofis revenues. It is not 
always easy to obtain (he opnortunitj of studying an analysis of 
the Turkish budget ; ]\I Ileidborn has simplied full tables for 
the budgets of 1910-11 and 1911-12. * 

In both cases a striking fact is tlie proportion between direct 
and indirect taxation (about two to one). The greater part of the 
former is furnished by the heavv tithes, which are in effect 
taxes on the jiroduce of the soil as well as on farm animals. 
M. Heidborn does not deal with the effects of. taxation ;' hie task 
is to set forth financial practice as it is. Otherwise he would, no 
doubt, have called attention to the seriousness of the burden 
which the tithes (the so-called vchur) place on agriculture, 
stemming its healthy development. Equally striking is the 
contrast between rural taxation (yielding in 1911-12 
j 6T10,902,820), and urban taxation (^Tl ,645,498). For some 
illuminating comments on this inequality, as for an excellent 
account of the fameitu, or income tax, we would refer the student 
-to M Heidborn’s pages. 



> <« ' ’ , ' ' 

The thurd division of the book is devoted to the Ottoman 
public debt^its appearance in 1864, its growth since then, its 
administration al the piesent time. We have carefully compared 
M. Heidborn’s treatment of this subject with Sir Adam Block’s 
recent report, and we can only say that it is admirable. ^ * 

M. EpstbIn 

Np. 89.— VOL. xxiii. 



Notes on Wages and the Cost of Living in South Africa. 

In South Africa occupations are, in a general way, as varied 
and complex as they are at home, but division of labour has not 
been carried out to so minute an extent. A mason, for instance, 
in South Africa might find it necessary to have some knowledge 
of brick-making, joinery, and of machinery; a carpenter would 
be expected to know something about wagon-building, and a 
blacksmith is often called to do some fitting or engineering work. 
That is to say, occupations or trades are not so definitely marked 
as at home, and experience of woik is more general. 

Speaking broadly, w^ages in South Africa are higher than at 
home in all trades and occupations, owing mainly to the differ- 
ence in the supply of skilled labour. The average wage,; for 
example, of a good bookkeeper ranges from £15 to £25 a month 
in a moderate sized business. This in turn reacts on the unskilled 
labourers. The presence of a coloured race, moreo vr-i , undeniably 
gives a higher value to the labour of white men. This has an 
important effect on indigency, and makes poor white’s problem 
quite diffei'ent from the unemployed and out of work question 
at home. It means that those unskilled white labourers, who, 
through no fault of their own, fail to maintain themselves iij the 
aristocracy of labour w^hich is theirs by right of colour or eificiency, 
fall far below the level of the doloured race. If a white man at 
any occupation can command only the equivalent wage of a Kaffir 
in the jnines, for instance, his case is pitiable in the extreme. 
For the Kaffir on his wage is rather comfortably off ; he needs 
little clothes, and these he buys secondhand, and his food is very 
inexpensive; his amusements and luxuries are very low, while 
in addition he probably has a plot of land around his kraal at 
home, and this is worked by his wives. He resorts thither at 
intervals to rest ; his income is supplemented in this w^ay. The 
white man, confronted with the high cost of living and his different 
standard of life, is badly off, A third element that conduces to 
high wages is really an extension of the first, yet different in 


its application. A large percentage cf the skilled workers in the 
mines hail from the old country ; and most of the expert engineers, 
draftsmen and surveyors have been imported for their particular 
branches of work. These men having left home and home com- 
forts must be compensated by increased wages for their loss of 
home privileges. This element of sacrifice ot comforts enters 
largely into all calculations. \ man before going abroad as a 
colonist generally weighs up whether it is worth his \vhi!e, from 
a mercenary point of view, to h home, fnends, and prospects 
for a position in the new ecantry. If he sees |hat the hiirher 
wage obtained will enable him to save more ceteris paribus ^ he 
is better off. 8o this element of being able to Srave more enters 
into prominence. 

Some high wages paid in the mines are, as at home, due 
to the charaotvir of the labour and of the work, apart from 
supply and demand. Some types of labour ‘arc dangeious and 
the mortality great. In the gold mines pneumonia and phthisis 
are caused by the fine dust which the miner encounters in drill- 
ing the rock. These diseases may or may not b^preventod, but 
the fact that the danger exists enters soincwhat |ato the money 
price paid for the labour. The wages in the goldmines on the 
Rand are greater than the wages in the coalmines. A miner’s 
wage in a gold mine averages daily from 21 rS*. to 35s according as 
he works by shift or by contract. It is rare that an actual coal- 
miner gets 205. a day. The average in the Natal mines is lower, 
and lies between 145, and 215. per diem. The average wage of a 
carpenter, bricklayer, 'fitter, or the like is 205. a day; and while 
the man is single he can save about 8s, out of this and live well 
on the remainder. But for the married man in Johannesburg to 
keep a wife and family on 205. per day is not an easy matter at 
the present scale of prices. Certain firms in Johannesburg 
discourages marriage among empfoyccs earning a salary of under 
50300 a year. 

In the early days of the mining industry the farmers of the 
Transvaal were able to supply mealies, meat, eggs and vegetables' 
to the mines, and got very good prices for them. This local 
market proved a great imi>etus to the farming industry as a 
whole, but after the junction of Johannesburg with the Cape by 
rail in 1892, and subsequently wdth Natal and DelagoaBay, great 
quantities of food were imported from overseas, and the farmer 
temporarily lost his control over the market. Incidentally it 
tnay also be noted that the appearance of the railway threw out 
of employment a vast number of transport riders, as previous to 

K 2 


this all goods, foods, and merchandise, machinery, &c., were 
carted to the mines by wagons. The competition for a time 
paralysed the farmers and dislocated the supply of labour. They 
received a further set back owing to the war, which disorganised 
them and dislocated the supply of labour. During this time most 
of the necessaries of life wqro imported to Johannesburg, Pretoria 
and other towns, by rail from the Cape and England. However, 
the farmers latterly are making use of the market at their doors, 
and soon a time will come when they will be able to supply 
practically all that is necessary apart from luxuries. 

A general examination of retail prices of food sold to-day 
at Johannesburg shows a difference of from 50 to 100 per 
cent, in price as compared with the prices of similar articles in 
England. This difference is due partly to the greater cost of 
production and partly to the high prices obtained for other articles, 
such as clothes, i'urniturc, &c. For the prices paid for these 
articles tend to affect prices of food by the general economic 
levelling up which takes place ; the baker and the market gardener, 
having to pa^f the high prices demanded for the other articles, 
raise prices accordingly. A characteristic instance of this occurred 
to the wTiter |hst after landing at Capetown. After the monotony 
of life on board ship, a glass of milk was thought to bo a delicious 
beverage, for all milk on board was sterilised and not very palat- 
able. Sixpence was charged for a glass t^'hich at home would be 
easily procurable for a penny or twopence. 

Coming to conventional necessaries, there is a great variation 
of prices according to the article in qucAion. It must also be 
borne in mind that out of a total iin|X)rt in 1909 of £27,000,000, 
£6,000,000 were articles of food and drink; and in nearly all 
cases there is a tax on these articles. Therefore the prices obtain- 
ing throughout South Africa differ materially from those at 
home, not only by the extra cost of freights, but oiso by the 
amount of the duty. And as happens in nearly all protected 
countries where food and other necessaries are taxed, the prices of 
luxuries and amusements are correspondingly greater than in 
those countries where the former are not taxed. This is simply 
an illustration of the interdependence of economic facts; we 
cannot raise the wages of the plasterer without at the same time 
affecting the wages of the carpenter. Crockery, articles of decora- 
tion, sweets, paintings and fixtures are from 50 to 200 per cent, 
dearer than at home. Tobacco, a conventional necessary, is 
oheaper, as a great deal is grown in the country, but if one wants 
English tobacco one has, of course, to pay more for it* Beer, 


lemonade, dkc., are all 100 per cent, more than at home, also 
prices of admission to theatres and other places of amusement, 
items which are really imi>ortant factors in a town-dweller’s 

But the greatest difference in the cost of living in South Africa 
as compared with home, especially in the towns, is undoubtedly 
rent. This factor stands pre-eminent. It in particularly so in 
Johannesburg axid Pretoria. There are three main causes for this ; 
firstly, the high value attached to the land in and near the gold 
mines; secondly, the scarcity o! houses ; thirdly, the cost of labour 
and material. People at first, were too much engrossed in digging 
or speculating for gold lo trouble about building houses. The 
dominating idea was co Uiuke uioney and get away. Again, 
materials and labour being high, houses could not bo put up at a 
small cost, rJince 1V#08, in and around the big towms of Cape- 
town, Johanrcsburg, Pretoria, and Durban, with the advent 
of tramways, suburbs are springing into exisfence, thus bringing 
cheaper land and healthier surroimclings within reach of the 

To-day the building trade is very flourishing in all these districts 
and houses are being built remarkably quickly. This tends, of 
course, to lower rent and to bring a healthier tone to the 
munkipality; but even now" prices are high. Tw"o rooms, very 
small and unfurnished, 8 feet by 10 Jeet, and 10 feet by 12 feet, 
two miles from Ihe market square in a poor quarter of Johannes- 
burg, fetched £5 a month. Tn the same quarter there were two 
rows of w^orkmen’s cottages with four rooms and a bathroom, but 
no kitchen, at £6 10«9. a month. These, too, in a dusty, very 
dirty part of the town, quite near to the mines. In the suburbs 
a four-roomed house with kitchen and bathroom, suitable for an 
artisan, was obtainable for from £8 to £12 a month. In the 
country districts rent is, of course, lower, and a house of the 
latter description, •with a good garden, at a place like Vryheid, in 
Zululand, ranges from £4 to £7 a month. 

Mr. Aiken, in his report before the British Association on the 
“Cost of living in Johannesburg,” says : (1) A brick house of four 
rooms and a kitchen costs as follows : — 


& s. d. 

House, brick, stone, and 

mortar 142 17 0 

Imported wood and iron 
gates and furnishings... 150 15 1 

£293 12 1 


£ s. d. 

Skilled 194 14 0 

Unskilled native 44 7 0 

£239 1 0 


(2) For a brick house of three rooms, kitchen, and bathroom, the 
total cost would be a little less, viz., J6495 '16$, Sd. A wood and 
iron house costs less. The estimates given are contractors’ costs, 
and in ordinary circumstances the costs to a proprietor, not a 
builder himself, will probably be at least 10 yiei cent, higher. 
This is to say a house of No. 1 description would cost ^585, of 
No. 2 descrijjtion £646. The value of the ground would be on an 
average £200, and in some cases much more. Thus, from the 
above, the total price must be £785 for No. 1, and £746 for No. 2, 
on which a rental of £96 to £144 per annum is charged. 

Comparing above with figures given in the Board of Trade’s 
report, Cd. 3864 (1908), we find the average English artisan 
pays on an average from 4.*?. fid. to 5.<?. 6d. a week in the case of 
four roomed, and 5s, fid. to C)S. fid. in the case of a five-roomed 
house of this description. Thai- is to say, at the most, about 
£16 18.9. a year, as compared wdth anything from £60 to £96 and 
£144 per annum in 'South Africa, prices varying from country to 

There are one or two other items which it would be well to 
note under this heading. The first is the cost of travelling. On 
the railways there are only two classes, first and second, third 
being usually reserved for natives. Generally speaking, every- 
one who is anybody travels first, and only the lower middle 
class travels second. .Distances are greater and far(‘s dearer than 
at home. Certain concessions are mude for long distances and 
return fares, seavson holiday ticket, fe. , Init even then the cost is 
great. A return ticket from Viyheid to Johannesburg (622 miles) 
costs £5 first class. The railways of the whole of South Africa 
are now under one management: thev are owned by the State, 
and in the past they liave been worked at a large profit ; naturally 
it has been pointed out that this is an indirect form of taxation. 
Since the Union great economies, have become possible, some of 
which have already been carried out, while others are pi'omised. 
As is natural in a country where high wages are general , holiday- 
making is proportionately expensive, as distances to the coast are 
very great, and the cost of accommodation is generally dear. 

Another clement is the cost of education. Primary education 
in the Transvaal is free, but not in Natal and Cape Colony. Under 
the Union it is proposed soon to make education free and com- 
pulsory. Great strides have been taken by Natal, which is 
pushing ahead rapidly ; but even so there are only a few good high 
schools, and these are expensive, as the pupils in the country 
have to travel long distances and pay for board. Books and 


stationery, too, are very expensive ; in our opinion too much so 
considering the fact that they are imported free of duty. The 
booksellers must be ma^^ing more than a fair i*emunerative profit 
on their sales. For example, all the Is net books in the Every- 
man or World’s Classics are charged l5. OJ. here, except at 
the coast towns and in one or two placets in Johannesburg, where 
they are 1^. 3J. On books which are W)t ne^ the increased charge 
is often much greater. 

It will be seen on examining tlie import tod erport lists of 
South Africa that the country .4^ yet does not pioduce sufficient 
articles of looJ and drink for itbeil ; the mnjn hulk of its energies 
K devoted to mfniug and not to manufactures, which therefore 
njust be imported It naturally foliou« tliat these wull be dearer 
than di home, u hence ii}ost ol them eome. In additivm to the 
cost of freiglr. thither, must be rt^ekoned the tanff, varying 
according to dith'reut artieU‘s, on all luanufactures. 

Following the method passed by the Indigency Keport of the 
JVansvaai for 1908, cerlain eomparativ-* hgures for the cost of 
living can be obtained to give a general ivlea ot the difference in the 
cost of living of the working classes in both countries. (The 
basis of comparison being the report of the Board of Trade, (VI. 
3804, 1908.) The figures given in the rei>ort are based on the 
working-class budgets of 1,944 families in 72 towns, whose weekly 
w^ages vary from 20.9. a week to ov^r 50.9. The average wages 
of properly qualified artisans in sueh trades as the building, 
engineering, furniture making, and printing tiades, are between 
30.9. and 42.9. per week, and the tvages of their labourers and 
assistants vary from 18^. to 27.9. per week. 

Taking first the case of the qualified artisan wdiose earnings 
amount to 35^. to 406’. a v\^eek, an examination of 292 eases m 
England show^s that on an average each hnmily earns 36.9. OJdf. 
per week, that the number of children is 3*4, and that 22.9. 3d. is 
spent in food |>ernveek, viz., 00 per cent, of its income. The 
average weekly diet consists of the following articles : — 

10 iba. Flonr 
„ Bacon 
16 , , Potatoes 

i ,, Coffee 
12 Eggs 

20 lbs. Bread 
J „ Clieeso 
2l „ Rice 
„ Sugar 

2i ,* Tapioca and 

lbs. Meat 
2 „ Butter 

i .. Tea 
lOj pints Milk 

To these must be added a certain quantity of vegetables, jams, 
currants, and condiments, costing on an average 3^. per 

week, under ‘‘Other Costs” heading. 

By calculating the cost of these articles of the same quality in 


Johannesburg and the rent, we get at an approximate comparison 
of costs at actual figures. 

Artisan class, per week : — 

London. Johannesburg. 




. . 25 


Sis. 9\d, 


... c6 


255. to 405. 

Other cORtf? . . . 



185. Id, 


... 39 

785. to 935. 4i<2. 

Thus these totals represent the weekly expenditure in London 
and Johannesburg res]>ectively. An artisan, therefore, in 
Johannesburg w^ould require at least from £16 to £20 a month 
in order to live at the same standard in the matter of food, style 
of house, clothing, &c., as he would require if living in England. 
As the standard of life is somewhat higher in the Transvaal this 
figure is somewhat low. Thus the cost of living is almost exactly 
double on an average. Taking the efficiency as being equal, his 
labour is probably over three tunes as expensive wffien w^e take 
into consideration the standard of life and comfort. 

It is unnecessary to compare in detail the weekly budget of the 
labouring class, for in reality the white unskilled labourer, as a 
class, is at present hardl> existent. Large numbers, if not the 
greater number, of unskilled labourers in England get less than 
21.9. 4(1, per week. The labyurer m Johannesburg, say, living at 
the standard of the English labourer, would recpiire about £8 a 
month if he lived m a cheajj two-roomed house (non-existent at 
present), and up to a month if he Jived in what would be a 
respectable house. 

The cost of liv^ing is of course considerably less in country 
towns, mainly owing to the difference in rent. In the case of 
groceries the variation from Johannesburg prices is small; in 
fact in countr>^ towns it w^as found that groceries cost more 
because, though Ihe railway and freight charge would be about 
the same, the turnover w^as less; competition and large turnovers 
in the big towns tend to low^er prices. Johannesburg prices are 
highest in meat, country prices from 15 per cent, to 20 per cent, 
low’er. Milk is 30 \K^r cent. chea])er in the country than on the 
Band. Eggs 40 per cent, lower in the country than in Johannes- 
burg, bread is nearly the same in all towns, but in some country 
places it is up to 15 per cent cheaper. Taking rent, food, and 
coal together, the cost of living in Pretoria, Pietersburg, and 
Vereeniging is from 8 per cent, to 12 per cent, less than it is along 
the Band, while in other towns on the Transvaal it is from 15 to 



20 p©r cent, cheaper. In rural districts the cost of living is on 
the whole considerably less. A fair idea may be obtained as 
follows : board and lodging for single men in the country costs 
£6 10s. a month, including washing ; the same type of room and 
food in Johannesburg would cost from £9 9s. to ,fl0 105. per 
month. In the coast towns the prices vary from £7 to' £8 lOs. 

J. Morgan Rees 

A New Historv of the P(»pT Office. 

A SYSTEM of Posts Vas existed in this country for nearly five 
hundred years foi the <"(‘uveyaiice of rTovernnient dex patches, 
and as a piibhc service for al»out three hundred years. It is a 
curious fact that the first serious attempt to write a history of this 
service was not made until about fifty years ago. At the 
beginning ox the seventeenth century the union of England and 
Scotland made the organisation of the T'ostal Service an important 
part of Government administration. Ihe constitutional struggle 
between the Crown and Parliament which followed made the 
control of the Posts a matter of serious contention between the 
two parties. In the first half of the century proclamation followed 
proclamation for the control of Posts, and in the second half the 
importance of the Post Office as a •source of revenue and as an 
instrument for the encouragement of trade and commerce became 
more fully recognised ; but although the journals of Parliament 
and the records of the public departments were considerably 
occupied with matters relating to the Postal Service, no general 
writings on the subject are available for the historical student. 

In the eighteenth century the revenue of the Post Office 
increased rapidly, and attention was more and more turned to it 
as a source of supplies in support of the wars in which this country 
was engaged, the*rates of postage being increased by successive 
Ministries. The extension of the system of Posts to meet com- 
mercial requirements also obtained much attention, although 
perhaps more in the interests of revenue than of the welfare of 
the country. Members of Parliament took a steady interest in 
the franking privileges which they enjoyed, and to such an extent 
that the interval between one Parliament and another caused a 
marked increase in the postal revenue of the year. Nevertheless, 
no history of the Post Office was written, and in those days public 
departments gave no account of their proceedings in annual 


The taxation of correspondence for the purpose of raising 
revenue reached its culminating point in the early years of the 
nineteenth century. So long as the struggle against Napoleon 
continued the nation bore its burden patiently ; but when peace 
came and the commerce of the country increased as if by magic, 
while at the same time the use of machinery enormously increased 
the power and range of manufacturing industry, the demand for 
a cheaper and more general system of communication grew 
proportionately. It was so difficult, however, to transform a 
Postal Administration which had long been organised as a 
machine foi raising revenue rather than as a means of meeting 
public re(juirements, that an almost revolutionary outburst of 
public opinion was necessary to secure the introduction of penny 
jiostage. Even then there was no history of the Post Office 
available for public information, and the Department was known 
only as it affected the daily life of each individual. 

In 1844 attention was called in Parliament to the opening in 
the Post Office of letters addressed to Mazzini and his friends in 
this country under the authority of warrants from the Home 
Secretary, and a serious public agitation followed. As a result 
Committees “of Secrecy “ were a.]>)H>intcd by both Houses of 
Parliament to inquire into the aiitliorily for the practice and it 
became necessary to investigate its liistory. The control of Posts 
as a safeguard agaijist foreign enemies and domestic agitation 
was, however, a principal object of th(' }>()licy of successi''^e Govern- 
ments during the sixteenth and seventeenth centuries, and the 
inquiry practically lu'camc the liisiory of the Post Office 

as a Department of Governiueni.. '[’he report of the Com- 
mittee of the House of (Vmimons gave a geiicral sketch of the 
struggles for the control of the Post Office in the reign of 
Charles I. and under the Commonwealth, and this sketch \vas 
illustrated by an Appendix containinr: a large number of historical 
documents consisting of patents and warrants, ^proclamations and 
Acts of Parlianumt relating to the Postal Service, as well as 
numerous extracts from the journals of the Plouse of Commons 
from the reign of Henry VITT. to the year 1837. This collection, 
which was chiefly compiled by Sir Francis Palgrave, then Deputy 
Keeper of the Pecords, has been the source from which subse- 
quent writers upon the early history of the Post Office have drawn 
most of their materials. Tt is only in recent years that other 
sources of information have become available in the numerous 
calendars of State papers. 

first annual report on the Post Office in 1864 contained 


a short general account of Post Office history. The report was 
signed by the late Duke of Argyle as Postmaster-General, but 
the historical portion ip known to have been written by Mr. 
Scudamore, who afterwards became well known in connection 
with the transfer of the Telegraphs. In its compilation consider- 
able use was made of the old books of Post Office accounts, dating 
from about 1677, which are still in elkisteiu e. Mr. Scudamore, 
who was a contributor to Puncn and other periodicals as w ell as 
an official, was a clever waiter, and his sketch, although very 
brief, has been much quoted b> later writers. 

In 1864, Mr. W. Lewi ns, an officer of the Surveying 
Establishment of the Pos/ Office, published Her Majesty' Mails, 
an octavo book of some 850 pages, w^hich was designed as the 
first of a series of histories of the Governrrient Departments. 
The other hiscorics, if written, were never pul)lish.d. In this 
book considerable use wds made of the report of the Committee 
of 1844, bui Mr. Lewins had also collected a good deal of 
information from local histories and gu' les and directories as to 
early postal rates and arrangeni''nts. The chief part of the book 
is, however, occupied with an account of the penny post agitation 
and of the subsequent administrative changes, of which, to some 
extent, Mr. Lewins had personal knowdedge. For instance, he 
was able to give particulars of the staff* and organisation of the 
Post Office in his day, and to descrilj^ the growth of the raihvay 
travelling Post Offices and the establishment of the Post Office 
Savings Bank. 

Nearly thirty years passed before the next attempt at a history 
of the Post Office w as made. In 1893 Mr. Herbert Joyce, then 
Third Secretary of the Post Office, published The History of the 
Post Office from its Estallishmcvt doum to 1836. Mr. Joyce 
was an official of long service, and probably his reason for stopping 
short before the introduction of penny postage w^as that his 
personal knowledg^^ of the administration of the Post Office 
during his own years of service, and his training by the men 
wffio were responsible for that administration during the earlier 
years of the penny postage era, made it difficult for him to deal 
with the subject without touching on questions which seemed to 
him too confidential for public discussion. Besides this, the 
description of the various new branches of Post Office business, 
such as the Savings Bank, the Telegraph and Telephone Services, 
and the Parcel Post, all of which came into existence during his 
service, would probably have made his book too bulky. For the 
practical student, however, the fact that Mr. Joyce’s history ,^ps 


shorj; at the beginning of the period when Post Office administra- 
tion began to have serious importance for the student of current 
social questions considerably detracts from its value, and one 
cannot but regret thai Mr. Joyce, who must have known in 
relation to the Post Office so many of the things which are never 
written in histories, did not give us the benefit of his personal 
knowledge of the history of the Post Office while it was in the 
making. The preparation of this book had been a labour of love 
for many years, and a good deal of its contents were derived from 
an independent study of papers in the Record Office and in the 
archi^^es of the Post Office, as well as from old Parliamentary 
printed papers. ITnfortnnately, however, Mr. Joyce gave no 
references to bis authorities, and, owing to the absence of printed 
indexes and calendars of State papers, such as the modern student 
has at his disi)osal, the work of research among State records 
was a more difficult process than at present, so that Mr. Joyce 
necessarily missed ‘a groat deal of the material which is now 

Mr. Joyce’s ^vork has since remained the standard history of 
the Post Office, but ve have now another history produced by an 
American student. The writer is Mr, J. 0. Hemmeon, and the 
book is publislicd l)y Harvard University as No. vii. of its series 
of Economic Studies.^ Mr. PTemnieon tells us in his preface that 
his materials liave been obtained from various libraries in America 
and at the British Museum. The \rork, therefore, does not go 
beyond the printed records whkdi arc available for all students ; 
but the study of these reeoids has becm very thorough, and their 
extent is, of course, much greater now Hian at any previous time, 
so that, even so far as ihe earl\ history of the Post Office is 
concerned, the book is more complete than Mr. Joyce’s wwk. 
We also have on every page numerous references to authorities. 
In particular, Mr. Hemmeon appears to have made very extensive 
use of the reports of Parliamentary Committee^'^ and Commissions 
which touch on matters of Post Office history, and in this manner 
he has obtained a good des\ of financial information, of which 
there was little in Mr. Joyce’s work. 

As Mr. Plemmeon writes for the information of the modern 
student, he naturally deals to a large extent with the recent 
history of the Post Office, and the greater part of his book there- 
fore covers ground which was altogether excluded from Mr. 
Joyce’s survey. Also as a student be is free to discuss questions 

* The History of the British Post Office ^ by J. C. Hemmeon (Harvard University, 
191%. Pp. xii + 261. 8s. 6cZ. net. 


which Mr. Joyce as ati official left out c£ sight; such as, for 
instance, the relation between the staff of the Post Office and the 
State as an employer, the history of which is brought down to 
the issue of the report of the Hojhouse Select Committee in 1907. 

For informs tion as to the modern administrative changes In 
the Post Office, Sir. Hemmeon has^ relied chiefly on the annual 
reports of the Postmaster-Greneral. lliese report;, are easily 
available for students, but, nevertheless, it is convenient to have 
the chief results summarised in a brief and accurate form. In 
this way we get particulars of bnrh as the insurance and 
registration of letters, 11 o express delivery service, newspaper 
postage rates, book or hallpeiiny post, pattern and sample post, 
postcards, parcel posi, postal orders, Post Office Savings Bank, 
and annuity and assuraRCo business. There are also separate 
chapters deal ng wdth the Telegraph. S>stem of the Post Office, 
and the relations betwcim the I’ost Office and the Telephone 
Companies, Vvdiich are based chiefly on the reports of the Parlia- 
mentary Committees which have considered these questions. ]n 
dealing with these modern matters it cannot be said that Mr. 
Hemmeon has expressed any original views. For instance, in 
dealing with the telegraphs he stops short at the statement that 
their financial result has been unsatisfactory, without considering 
to wliat extent the indirect benefits of an extended telegraph 
system are a sufficient compensatitm for loss of reveniu'. The 
chapter on telephones also dwells chiefly on the restrictions placed 
on telephonic development as a result of the Government 
monopoly of telegraphs. The historical facts are, however, 
accurately narrated in a useful summary without any conscious 
intent to influence the mind of the reader. 

Mr. Heimneon gives a useful bibliography, and his book 
undoubtedly provides for students a more convenient and more 
complete summary of Post Office history than has hitherto been 
available, although his book cannot be regarded as a final and 
complete history of the Post Office. Even as regards printed books 
his studies have not been complete. For instance, he has over- 
looked such a book as Norway’s ITistory of the Post Office Packet 
Service from 1793 to 1815, and no use has been made of the 
earlier unprinted records of the Post Office which in recent years 
have been carefully gathered together in the Eecord Boom at the 
General Post Office. A good deal of work also remains to be done 
by any enterprising student among the original papers in the 
Eecord Office, of which the published calendars necessarily do 
not give complete summaries. 

A. M, Ogilvie 




The Tax Experiment in Wisconsin. 

The experiment in income-taxation that is now being made 
in Wisconsin is a crucial one in relation to the future of State 
and Federal finance in this important sphere. Wisconsin has for 
some years had the reputation of being one of the most progressive 
States of the Union in its fiscal administration, and it is not 
without significance that in this State also there has been the 
most marked movement away from the control by the amateur in 
taxation and so-called “practical man of commerce, “ which has in 
the result been so much discredited in America, towards a proper 
combination of academic and business elements, and a due infusion 
of inductive and scientific study in public affairs. Wisconsin, for 
example, has led the way in an interesting library and research 
combination between the State administration and the regular 
university routine, in which the resources and experience of each 
side are made practically available for the other. In this State, 
too, the i^romincnce of a university representative, Professor T. S. 
Adams, u[)on the State Tux Commission is a notable feature. 
His efforts and those of Professor Pelos Kinsman (author of the 
Income Tax in the CommomceuUh of the United States) resulted 
in very imiK)rtant alterations in the original pro])osals for the new 
tax. When it is added tba^- the adrninistiution is nov, m the 
hands of Mr. K. K. Keiman (whose valuable inductive study of 
forty systems of income taxatiun was recently reviewed in this 
Journal), it will be seen that nothing that expeiience and study 
can suggest has been absent at the inception of the system. 
Indeed, the law is highly esteemed as tin last word of wisdom and 
experience, and it is stated on all sides that any failure in the 
result must be due only to defects in administration. All neigh- 
bouring States arc agog with attention, and will be ready enough 
to scrap their ineffective j;>ersonal properly ta^fes and follow the 
new system if it succeeds. Success will be a complete demon- 
stration that personal x>roperty may safely be superseded by 
income as a basis of State taxation, and that a highly centralised 
administration is effective and economical. 

The old system is not wholly abolished, but the “personal pro- 
perty “ now exemjffed includes money and credits, stocks and 
bonds, personal ornaxnents habitually worn, household furnishings, 
farm, orchard, and garden machinery and implements ; and the old 
limits of value for exemption of “one watch carried by the owner,’* 
and “pianos, organs, and melodeons,” have gone. Farm animals 

< 1 , 


dud merchants’ and manufacturers’ stock still remain chargeable, 
but there is a provision that receipts for taxes thereon may be used 
as cash in paying the income tax, so th'^t virtually the trader pays 
whichever tax may be the highoi ! Without attempting a detailed 
description of the system, we may toch upon the points of chief 
interest to British students. The assessment is upon a ‘‘total 
income return” in one sum according to a giaduated scale. The 
family is taken as a unit, as the incomes of wife and children 
are included, but whereas the '^xeaijption limit iS $800 for an un- 
married individual, it is rais^^d to $1,200 f<. husband and vife, and 
an allov'ance of $200 is n tor each child under eighl«*en years 
of age. For each adil- ionol i^icrson for whose support; the tax- 
payer is legally liabir, nnd who enfiroly dependent upon the 
tax-pay^r for 3us supriort, an allowance (analogous to the Prussian 
case, but not ••estricted by a total income limit) of $200 is given 
These exemptions are allowed from incon^'s of ill amounts. 
For individuals the graduation is not effected by applying different 
rates to the varying total incomes (nei after allow’anco for exempt 
sums, &c.), but by the follov^iiig method : — 

The tax upon $5,000 would consist of — 

1 % upon the Ist $1,000 $10*00 

li% „ „ 2nd $1,000 $12*60 

,• n 3rd $1,000 $16*00 

» ,» 4th $1,000 ! $17*50 

2% „ „ 6th $1,000 $20 00 

Total tax . , . $75 00 

$75.00 would be but per cent, of $5,000. The true rate varies 
from ] per cent, on the first $1,000 of taxable income to 2*95 jier 
cent, on $12,000, and 6 per cent, on all siiiiiH above that — the 
composite rate, however, never reaching a full 6 per cent. 

The return for trade, &c., in all cases is higlily inquisitorial, 
since it shows the*gross turnover, and all the expenses — it is, in 
fact, an abbreviated trading and profit and loss account, but on 
a basis of actual cash receipts and disbursements, and provision 
is made for accepting “earnings ” for a basis rather as the excep- 
tion than t^ rule. So the “inventory” or items of stock at the 
beginning and end of the year — so vital to the British conception 
of profits — is provided for at the end of tlie return, as a mere 
addendum, serving to furnish the taxing authority with the oppor- 
tunity of adding any increase io the “cash ” result ; but it is by no 
means clear that any deduction would be allowed for a decrease ! 

The annual value of a residence occupied by * the owner has 




of course to be included as income, but, judging by the amouut of 
paternal persuasion in explanatory literature that is necessary, 
the idea is not yet acclimatised. 

The provisions for coitnpanies and corporations are highly 
ingenious. There is no attempt to apply graduation to the 
absolute amount of j)rofit, ^d thus to penalise the large concern 
merely because it is large, nor is the German method followed 
of allow'ing an exempt percentage upon capital, but the device 
adopted seeks to tap the unearned increment. If the proportion 
which the taxable income bears to the assessed value ,of the 
property used in making the income is 

Loss than 1% the rate of tax is 1 % 

More than 1%, but not over 2%, rate of tax is 


2% „ 

,, 3% 

.. . 4 % 


3% .. 

.. 4% 

„ .. 2 % 


11% .. 


„ 6 % 



6 % 

To illustrate by a concrete example : Suppose that a concern 
has a plant assessed at $200,000, and taxable income to the 
amount of $10,000. As $10,000 is 5 per cent, of $200,000, the 
rate would be 2^ per cent. , and the ta^, would be $260. If the 
assessed value of the plant was $-100,000, the pro):>ortion would 
be per cent., the rate 1| per cent., and the lax $150. If the 
assessed value of the plant was $50,CK)0 the proportion which the 
taxable income bears to the assessed the property would 

be 20 per cent., and the rate of tax would be 6 per cent. 

The general object is to adjust the rate of taxaiion upon cor- 
porations to their earning power lint such earning power is 
based upon tlie relation of the taxrble income to the assessed 
value of the property owned by the Company in the State, ^and 
actively used and enji>loyed in the acquisition of such income. 
Thus the rate paid bears no direct relation to that for individuals. 
In so far as “assessed values ” are fixed on a cost basis, or by a 
unit method such as superficial area or “so m^h per spindle,** 
the method may give logical results, but in so far as market values 
and the element of “earning power ’* enter into them, the method 
moves in a vicious circle, and only transitory su^luses will be 
touched, for they cease to futoish an indej^endeOT criterion by 
which profits may be judged to be large or small. Like other 
attempts to find an independent “faculty** in ju-ofit-dividing cor- 
porations, this tax will act as a differential favour (in the share 
market) on stocks of low yield, and conversely a burden upon 
those of h kJuyi eld. 

WIS] Tim TJA 14S^ 

The jamijigemeBts dmdiag tb© profits of coBcemis trading 
beyond 1!he boundaries of the State are also notable, The common 
Prussian Communal Syscem of division according lo wages paid in 
the respective areas is not appiicaole ; the two deciding ratios are 
gross revenue and assessed values of property owned, not in a 
mean (or other proportion) between /the rcsuUs, following the 
G*emxan practice where various criteria are chosen, Dot in the 
following peculiar manner ■ 

“Take the glross business in dollars of the corporation in the 
State and add the same to the full value in aollars of the property 
of the corporation loco led the State. The sum so obtained 
shall be the numerator o, a fraction of which the denominator 
shall consist of the total gross business in dollars of the corpora- 
tion, both within and without the State, added to the full value 
iij dollars of tii^ entire property of the cor|X)ra^ion, both within 
and without the State. The fraction so obtained shall represent 
the propc«rtiou of the capital stock represented within the State.*’ 

Taking the ease of a concern winch doe^ business both within 
and 'without the State with a net profit of $3t,20() ; the gross 
business done within the Stale is $50,000 ; the property located 
within the State is worth -$‘20 ,000 ; the busincbs done within and 
without the Stale is $150,000, and the tolal property within and 
without the State is $21,000. We have the formula 

60,000 -r 20,000 _ 70,000 
160,000 + 21,000 171,000 

of 34,200 = $14,000 taxable. 

The more one tests the method in relation to different propor- 
tions and classes of business the more of an aritlimetical curiosity 
does it appear. 

The individual is allowed to deduct from his gross income 
dividends from a taxed company, but if from a partially taxed 
company, such as the above, only a hke proportion of the dividend 
is regarded as taxe(i> the remainder being treated as untaxed 
income from outsiide the State. Tlic^re seems to be no provision 
whereby the individual is to be kepi advised what this changing 
proportion is — evidently he must find out for himself. 

Although t^ administration is central and unified, the revenue 
will go to the areas, 20 per cent, to the county, 70 per cent, 
to the village, city, or town where it is collected, and only 10 per 
'cent, to the State towards administrative expenses. The pro- 
visions for allocation of the tax from one payer are very elaborate, 
even mom to than the following example published by the Com- 
missioners would indicate 

No. 89.— VOL. XXIII. 



THfi B00»0M10 ^OtTEHAI- 


,, “A, person residing in the city of A, realises a net income 

(after making the deductions which the law permits) of $2,840, 
and also owns a hotel in the village of B, from which he receives 
a net income of $540, and a farm in the town of C, which yields 
a net income of $720, and his combined income is $3,60p. He 
is a married man with noiihildren. Deducting the exemption of 
$1,200, his taxable income is $2,400, and his income tax— 

1 % of flrat $1,000 $10-00 

li% of second $1,000 12-60 

15 % of $100 6-00 

Total $28-60 

As the income was derived $2,340, or 65 per cent., from the city 
of A, $540, or 15 per cent., from the village of B, and $720, or 
20 per cent, from the town of C, the tax should be redistributed — 
subject to the suljseqnent adjustments already indicated — in the 
same proportions, that is : 65 per cent, of $28.50 or $18.53 to the 
city of A, 15 per cent., or $4.27 to the village of B, and 20 per 
cent., or $5.70, to the town of C. 

As a final feature of interest may be mentioned the effort made 
to secure returns complete in every particular, since the assessor 
is subject to a jK-nalty of five dollars to be deducted from his salary 
“ for each question unanswered *’ ! The Lntisher will think of 
his own forms, and his lodhl assesior. 

J. C. SlAMP 

Note. — Since the above was written some imponant details are to hand. The 
first year’s yield is £700,000, or con«ido>*ably more than the yield of the whole 
federal tax in 1863. In Milwaukee alone the entire proceeds of income taxation in 
any former year in ell the States put together are exceeded. Two-thirds is assessed 
upon corporations, 5,536 in all, of which 3,977, or 72 per cent., are assessed at the 
highest rate (6 per cent-), not more than 200 being assessed at any one of the^lower 
rates. Greater prominence is to be given in future to “ stock*’ or ‘Mnventory ” in 
computing liability. 

Official Papebs 

Departmental Committee on matters affecting Currency of the 
British West African Colonies and Protectorates. Report. 
[Cd. 6426.] 1912. Price 8J-d. Minutes of Evidence. 

[Cd. 6427. J 1912, ♦’ Price Is. 2d. 

This Committee has recommended the establishment in the 
five Crown Colonies of West Africa of a gold exchange standard, 
with a specific silver coin, closely resembling the standard estab- 

X918] omoiAIii 147 

' i 

lished in India. Indeed, the details of the Committee's proposals 
have so little novelty in them a>s to call for small notice. The 
Colonial Office have accepted the Committee's recommendations, 
but have referred them to ihe authorities of the Colonies in 
question before actually carrying them out. The interest of the 
Committee's report for students of mm^etary affairs lies mainly in 
the evidence which they have collected ot the currency arrange- 
ments existing hitherto. 

At present the main media of exchange are silver coins of the 
United Kingdom. In 1911 the British Mi'iit sent to West Africa 
no le^ than £874,850 in . t.'rling silvei, and the amount ot our 
silver issued since 1901 use m West Africa fa^s but little short 
of what has been issued <or the United Kingdom itself; and in 
recent year^ the pxofits of tin Mint have been greatly swollen 
by receipts fi’ou this source This silvei, although limited legal 
tender here, is in the peciiliar position of bepig unUmited legal 
tender in West Africa. In the event of there being a flow of 
money out of West Africa at any lime, liO provision exists for its 
redemption in gold at par. Tne principal English joint stock 
banks have an arrang(mient with the Bank of England by which 
they may pay in a certain amount of silver coin in a given period, 
but if the Bank is asked to take silver in excess of this amount, 
the payment of a commission is required. 

If the recommendations of the Colnmittee are adopted, and a 
new specific silvei coin in introduced, it will be necessary in the 
course of time to withdraw British silver from circulation. The 
Treasury have agreed to take back an amount not exceeding 
£100,000 in any year. 

The Committee suggest that in the case of a new note issue, 
the introduction of whicli they propose, the coin reserve should 
amount to not less than three-fourths of tlie value of the notes in 
circulation. Most economists would probably agree that a system 
of legal reserve amcttHiting to a fixed proportion of the circulation 
is nearly always vicious, because, as soon as the reserve has sunk 
to the prescribed ratio, the redemption of any further note in- 
volves a breach of the law. When the fixed proportion is so high 
as three-fourths this objection has special force, because the 
reserve actually held is not likely to exceed the legal reserve by 
any very great amount. 

The Minutes of Evidence contain a good deal of interesting 
information relating to currency practice in semi-barbarous 
countries under civilised administration. 

J. Ebxkbs 

L 2 

X48 . BCoiiOlWO v[1IA!EM3« 

fio^l Commission on the Natural Resouro^ *trad^, and hagida- 
, tim of Certain Portions of Bis Majesty's Dominions, - 

Minutes of Evidence. Part I. : Migration. [Cd. 6516.] 1912, 
Price 2s. 9d. 

Part II. : Natural Resources, Trade, and Legislation. [Cd. 6517.] 
1912. Price 3s. 6d. 

These first instalments of the Report of the Dominions 
Commission contain no more than minutes of preliminary evidence 
taken in the United Kingdom, together with some papers laid. 
The first volume treats principally of the facilities for emigration 
to the princi]ial colonies, and comjirises evidence from the Agents- 
General and from representatives of a number of emigration 
societies. The second volume deals with a great variety of topics, 
of which the proposal for a British Empire Trade Mark is dealt 
with at the greatest length. The Commissioners proceeded in 
January, 1913, to New Zealand and Australia. 

Consular Report on the German Law of 1909 against Unfair 
Competition. [Cd 6006-2 ] 1913. Price 2d. 

This summary is by Sif Prancis Oiip^nhemiei;. The general 
principle of the German law is as follows : “Whosoever commits 
in commercial intercourse for the purposes of competition acts 
which are contiary to ‘ jiood fnilh ’ can be brought before the 
courts, for the purfioses of an injunruon and the payment of 
damages.” It has been held that “ads” are deemed to be con- 
trary to “good faith ” if they are contrary to the sense of decpncy 
of the fair and just-minded among the class concerned. Besides 
this general princijile, the law refeis to certain specific, abuses of 
unfair competition, of which the chief are*'abusi s in advertise- 
ment, abuses in connection with “sales” (i.e., clearance sales, 
&c.), unfair competition arising out of deceptive quantities sold in 
retail parcels, the bribing of employ ds, and unfair comment by a 
competitor against a man’s business reputation. 

Statement of the Rates of Import Duties levied by Foreign 
Countries upon the Produce and Manufactures of the United 
Kingdom, so far as notified to the Board of Trade in October, 
1912. [Cd. 6476.] 1912. Price 4«. lOd. 

19X9.3 cmvOlM^ PATIBS 149 

Return ^l^^hting to the • Rates of Import Duties levied upon 
Aftieles ImpoHed into the BriUsh Self-Governing Dominions, 
Crown Qokhies, Possessions and Protectorates, so far as 
notified to the Board of Trvd‘t in October, 1912. [Cd. 6476.] 
1912. Price 35. 8d. 

These two volumes, comprising ’between them abodt two 
thousand pages form a mos^ valuable and complete work of 
reference on the subject dealt with. They are classified accordmg 
to commodities, so that it is possible to compare at a glance the 
relathe heighj)|of the tariffs oo similar prouuc+s in a great variety 
of countries. The rat'^a oi duty are driven m tJie Englich equiva- 
lents as well as in the toreign nieasuies and currencies. It is 
intended to keep these relnms up to date by le-issumg them from 
time to time 'a the future 

Report of tic Commissioners of Customs and "Excise for 1911-12. 
[Cd. 646;^ ‘| Price 9Jd. 1912. 

This issue contains some useful statistical information relating 
to Old Age Pensions, and gives an account of the principal 
alterations effected by the new Old Age Pensions Act of 1911. 

Statement showing how Deposits in*Govcrnment Savings Banks 
in Certain Foreign Countries and British Possessions are 
Employed. [Cd. 6300.] Price Id. 1912 

Return Showing for every year from 1800 to 1910, inclusive, the 
Current Price of 'British Wheal per quarter, the Highest and 
* lowest Import Duties Charged on Imported Wheat, and the 
Current Price of Bread in London. [H. of C. 339 of 1912.] 

Price Jd. 1912. 


Statistical Abstract for the British Self-Governing Dominions, 
Crown Colonies, Possessions, and Protectorates, in each year 
from 1897 to 1911. (49th number.) [Cd. 6533.] 1912. 

Price Is. lOd. 

Final Report on the First Census of Production of the United 
Kiagdim (1907). [Cd. 6320.] 1912. Price 7s. 6d. 

This Beport is dealt with in Professor Bowley’s article above. 


Report on Strilres and Loeh-Oute and on Conciliation and Arbitra- 
tion Boards in the Vnited Kingdom in 1911, with Compara- 
tive Statistics for 1902-1910. [Cd. 6472.] 1912. Price lOrf. 

Report on Profit-Sharing' and Labour Co-partnership in the 
United Kingdom. [Cd. 0496.] 1912. Price 8Jd. 

To be reviewed. 


Report and Evidence of the Committee of Inquiry into Conditions 
of Employment in the Linen and other Making-up Trades 
of the North of Ireland. [Cd. 6509.] 1912. Price 1«. 9d. 

To be reviewed. 

C/imRENT Topics. 


Thk nt tent ion ol readers ol T^rofessor Irving Fisher’s article 
on A More Slablc Gold Standard, in the last issue of the Journal, 
is called to an article contributed by Mr. Aneunn Williams to 
the Economic eJouRNAL of dune, 189*2, under the title of A ^ Fired 


value of Bullion** Standard, Theie is airly jlose resemblance 
between the proposals made by Mi. Wil)ia/i»s twenty years ago 
and those for which Professor Fislur is ikw conducting so 
vigorous a campaign : —though Mr. WiPiamB piotx'^sed to sell 
notes, not gold coins, at a vaiymg pr m lenns of gold bullion. 
It is interesting also to recall thf seven, criticisms which were 
made, from the old-fashioned ])oint of view, in the following 
number of the .Journal by Bir Robert Giffen on what he termed 
proix>sals for “fancy currencies’* 

Thr jirincjpal British Index Numbers have now been pub- 
lished foi’ 1912. Ml. Bauerbeek's Index Number has risen from 
80 in 1911 to 85 in 1912, or G*25 per cent. ; the Economises ^ 
from 115*75 to 121*26, or 4*67 i>ei cent., and the Board of Trade’s 
from 109*3 to 115*0, or 6*2 per cent. The Board of Trade’s 
Index Number for retail prices of food has risen from 109*3 to 
114*9, or 6*1 per cent. Since 1900 the movements of these index 
numbers, all the numbers for 1900 being reduced to 100 for pur- 
poses of comparison, have been as follows ; — 

1918] OURBBNI 161 

H V ■ 

* u 


Bd. of Trade 

Bd. of Trade 

1900 ... 



Retail Food. 

1901 ... 





1902 ... 





1908 ... 


93 ’ 



1904 ... 





1905 ... 





1906 ... 





1907 ... 





1908 ... 





1909 ... 





1910 ... 





1911 ... 





1912 ... 





It has been announced th.H Mr. Sauerbeck will no longer con- 
tinue the compilation his index number, but that it w^ill appear 
in future in the Statist, 

The fluctuations in the percentages of unemployed in the 
period 1903-1912, according to the Board .of Trade’s returns 
relating to about 850,000 members of Trade Unions, have been as 
follows : — 



1908 ... 




1909 ... 




1910 ... 




1911 . 




1912 ... 


But for the inflated figure for Mareh, due to the coal disf^ute, 
the percentage for 1912 would have been a good deal lower than 

for 1911. 

Dr. James Bonar, Deputy Master of the Ottawa Mint, recently 
delivered an interesting address in ('’anada on the roundabout 
way in which the huge loans, now being made by this country to 
Canada, are remitted. In fifteen years Canada’s loans, for all 
purposes, chiefly from England, have amounted to about 
£400,000,000. In 1911 they were about £44,000,000, and 1912 
£36,000,000. As a natural conse(juence of this huge import of 
capital, Canada has an adverse trade balance, amounting in 1911 
to £35,000,000. But, Dr. Bonar pointed out, the balance of trade 
between Great Britain and Canada is in Canada’s favour — ^by 
£6,500,000. The loans cannot be made, therefore, by the method 
of direct trading. We find, on the other hand, that between 
Canada and the United States there is a trade balance adverse to 

^ For the Economist index number the mean is taken between 'the index! at the 
beginning and end of the year, i.e., tbe index for 1912 is the mean between the 
index for ;razL 1, 1912, and that for Jan. 1, 1913. 


Canada to the amount of ^35, 000 ,000, Thus, in a sense, the 
English loan may be said to have financed the American trade. 

A CORRESPONDENT writes : An Inrestigation of the conditions 
of Life of the Finnish Workman, by one of the women factory 
inspectors of Finland, has been lately published. Out of 953 
expenditure books issued, to be filled in during fifty-two weeks, 
380 w^ere found to be perfect. Among other interesting results, 
the following average ])er(*entageB wwe found to be spent on 
different forms of food : btead, 14T ; milk and cream, 9‘9 ; butter, 
7‘8; cheese, 0 5; eggs, 0'8 ; meat (excduding sausages), 6’2; 
sausages, J*t; fish, 1'8 ; potatoes, 2*4; vegetables, 0*7; fruit, 1; 
sugar, 4*3; coffee, 2 7 ; tea, 0*2; salt, vinegar, and spices, 0*3; 
mineral water and beer, 0*7; sundries, 0*6; making a total of 
55 4 per cent. The ])roportionate expenditure on different articles 
as compared with that m other countries w^orked out as follows : — 



u s. 




TVr cent. 55 40 

45 55 

43 13 

48 30 


Glotliing . 

,, 11 80 

12 04 

12 95 




12 40 

17 90 

IB 12 



Fuel and lighting . 

,, 4 10 

4 07 

5 69 

4 43 



„ 16 30 

19 78 


17 78 

22 05 







The effect of a shortening of the woiling daj on the 
employer’s cost of production has recentH been the subject of 
investigation in France' As is well known, the first attempt to 
fix a working-day in France by the State was the decree ol* 
September 9th, 1818, which provided for a 12-hours day; and a 
12 hours day remained the normal maximum until 1900, when 11 
hours w\as fixed by statute. The law^ of 1900 provided, however, 
that tw^o yeais after its promulgation (i.c., March 30th, 1902) the 
legal w’orking-day should be reduced to 10^ htiurs ; and tw’o years 
after that (/.c., on March 30th, 1901) to 10 hours. But there was 
never any vc'ry strict enforcement of the law. Wherever the 
conditions were such as to warrant a longer w'orking day, means 
were provided which allcnved of the prolongation. Even where 
the law has been tolerably well maintained, employers are not, 
however, complaining of the increased ('ost of production necessi- 
tated by the increased cost of labour. One result of the shortened 
working-day has been an increase in the system of piece-w^ork, 
which is replacing to some extent the former conditions of time- 

1913] cJtfRRsssr ?roMOs 168 

Sjb Thomas Hhnrt Elliott, , one of the honorary 

secretaries of the Eoyal Economic Society since its original 
foundation, has been appointed Deputy-Master and Comptroller 
of the Boyal Mint. Sir Thomas Elliott, who is fifty-eight years 
of age, had been secretary of the Board of Agriculture since 1892. 
The very important extensions of the work of this office in recent 
years have all been carried out under his general direction, and 
the development of the Board of Agriculture into an important 
Department of State has chiefly taken place during his long reign 
there. The best wishes of members of the Eoyal Economic 
Society will follow Sir Thomas Elliott to his new position of 
greater ease and dignity ; and apart from their personal feeling in 
regard to one who has so long served them, they nill greatly 
welcome the fact that regard has been had to economic and 
administrative experience in apf)ointiug to an important office 
in relation to our currency, which has been used too often in 
the past as a reward for claims primarily political. 

Mu. A. 1j. Bowled has received the degree of Sc.D., and 
Mr. G. U. Yule the degree of M.A. honcms causti, in the 
University of (Cambridge. 

It has been decided to establisli a Faculty of Commerce in 
the University of Durham, with degrees of Bachelor and Master 
of Commerce. 


The Economic Review. 

January, 1913, The Fjconomic JSasis of Universal Reace~Gosmo~ 
poliian or Iniernational? Archdeacon Cunningham. Bead 
before tlio l^kjoiioiiiie Section of the British Association, 1912. 
Juvenile Jjahour in Germany. Ernest Lesser, Copartnership 
arid Labour Unrest. H. Sanderson Eurniss. 

• Sta iisiieal J ourna I . 

December, 1912. Htill Birlhs in Relaii<m io Infantile Mortality, 
Eeoinald Dudfield. a discussion of the report on this subject 
prepjir(‘d by a S])(*cial Coinrnittee of the Society. The report 
is reprinted in this mnnber. PrcHidcniial Address to the 
Economic Science and Statisiind Section of the British Associi- 
iion, 1912. Sir II. H. Cunynouame. An attempt to justify 
economics as a “positive’' science. The Nation 8 Food Supply, 
n. H. Bew. An estimate of the proi)ortion i)roduced at home. 
Scottish AgricvlluraJ Chmiges. Major P. G. Craigik. 

January, 1913. On ihc use of (he Theory of Prohahilities in Slatisiios 
relating to Sociciy. Y. Edgeworth. The Presidential 
Address. The Rale of Interest oy) British and Foreign Invest- 
vienls. U. A. JiEiiFEriDT. An important contribution, to be 
followed by others, based on the study of a considerable mass 
of evidence. The Coyisumption of Alcoholic Liquors in the 
United Kingdom. A. D. Webb. 

Danhers* Magazine. 

December, 1912. Banhers' Congress at Berlin. W. C.. Drehek. 
An account of the proceedings at the important congress held 
at Munich in September. Presidential Address to Institute of 
Bankers. Lord Gosciien. British Gold Rctsertyes and the Gold 
Question in India. Sir Edw^ard Holden. An address delivered 
to the Manchester Statistical Society. 

January, 3913. Indian Currency and Finance. R. Murray. Denies 
the existence of the alleged clamour for a gold currency. The 
Price of Consols. A, H. Gibson. Mr. Gibson brings up to 
date his em])irical studies of this subject. Stock Exchange 
Values for the past Month and Year. 

February, 1913. Credit and Trade. Statistics, compiled by Mr. 
Seyd and Kemp’s Mercantile Gazette, of Commercial Failures 
in 1912. London Bankers* Clearmgs in 1912. Full statistics 
from 1868 to 1912. 


MAECH,1913] eecknt pbeiobioals and new books 

Journal of the Institute of Bankers. 

Januaky, 1913. The Foreign Exchanges. , Lectures 1. and IL 
Hartley Withers. To be published shortly in book form. 
The Indian Financial Management, W. F. Spaldino. A 
defence of the policy of the India Ofi&ce against Mr. Webb’s 

The Sociological Review. 

January, 1913. Fatigue and Efficiency. B. L. Hutchins. A review 
of the facts in the light of some recent works. 

The Women's Industrial News. 

January, 1913. Truck Fines and Deductions. B. L. Hutchins. 
An historical study. 

The Clare Market Heniew. 

February, 1913. Seine Branches of the British Library of Political 
Science. V. The W. M. Acworih Collection of Transport 
Literature. E. Cleveland Stevens. 

The Socialist Reriew. 

February, 1913. The Nationalisation of Coal Mines. F. Brooks- 
BANK. “A valuaiioD of the coal pits having been made (on 
a 9 per cent, basis), the coal owners must be compelled to 
exchange their share-script for Government bonds bearing 
interest at 3 per cent.*’ This would leave a profit balance to 
the State of £10,500,000 annually for sinking fund, etc. 

Quarterly Journal of Economics (Boston). 

November, 1912. Agricultural Development in the United States, 
1900-1910. J. L. Coulter. Ethical and Economic Elements 
in Public Service Valuation. J. E. Allison. A discussion of 
the principles on which the relations can be regulated between 
the owners of a public utility and the consumers of its product. 
Social Denmark. P. Soiiou. On Co-operation, Trade Unions, 
Insurance, etc., prepared in the Danish Ijcgation at Washington. 

* Specialisation in the Woollen and Worsted Industry. L. D. H. 
Weld. A general discURsion, not merely with reference to 
U.S.A. Fisher's Theory of Crises : A Criticistn. M. T. England. 
Criticises Professor Fisher’s theory that crises ai‘e duo to the 
interest rate (measured in money) not rising fast enough in 
comparison with the rise of prices. The Origin of the National 
Customs-Revenue of England. N. S. B. Gras. Based on 
original authorities. Frankfort-on-the-Main : A Study in Prus- 
sian Commercial Finance. I. Anna Younoman. An account 
of the very interesting experiments made there. 

Political Science Quarterly (New York). 

December, 1912. Recent Tax R.eforms Abroad. IL E. R. A. 
Seligman. Deals with Germany and Australasia. Marxism 
versus Socialism. VII. V. G. Sinkhovttch. A continuation 
of articles which have been appearing since 1908. Russian- 
American Commercial Relations. J. V. Hogan. 




Annals of American Academy (Philadelphia). 
jNovEMBKR, 1012. The Oiitlooh jot Industrial Pvaccl A series of 
articles by oooiioiiiists and business men. 

The Journal of Political Economy (Chicago), 

November, 1912. The Banldny Question in Congress. H. Pahkeb 
Willis. Wltaf is Future of American Cotton? 3, V. 

Bogan. The Economic Basis of the Fight for the Closed Shop. 
B. 'J\ l^Kwis. A dibcussion of the grounds of the claim for 
the exclusion of non-union labour. 

Decemukr, 1012. The Economic Tlicoiy of a Legal Minimum Wage. 
vSrnNEV Wrain. “The ceonoiuist has to point out to the states- 
man tluit tJie adof)tion of a legal Mininiurn Wage would in no 
way jnciease the amount of maintenance w’hich has to be 
])i*<j\id(Ml l)\ tlH‘ eommuiiity, in one form or another, for persons 
inea])al)](‘ ol produeing tlieir ow'n keej). It w’ould, on the con- 
trary, trnd st(‘adiK to reduee it- . . Minimum Wage Laws. 
F]iORi]N('L Keller. In the United States. 
dANUAin, JOlIh The Aim and Content of the Undergraduate 

Economics (^urdculuni . A. B. Wolfe. Bow ai'e the aims of 
eulturo and formal discipline and of vocational training to be 
reconciled V Some Economic Aspects of Immigration before 

1H70. 17 . W. 1\-\GE. Continued from the December number. 

JCatlg (\nial Traffic and Bailroad Compeiition in Ohio. E. L. 

Bullcliu (Ic la Hlatistiquo Geucralc dc la France (Paris). 
OcTofiEK, 1912. [/(’migration dcs peuplcs jauncs. Pp. 34. H. 
Bunlr. * 

IUtuc (V Ecomnnii^ Politique (Paris). 
NovEMBEu-DECEMBFJt, 1912. Lc Bossin dc Briiy vf la politique dc 
scs ent uprises sidirurgiqaes oa ininicrts. M. Vignes. Con- 
tinued in the next nuinher. Lc Bresil ci Vindustrie dn Caout- 
chouc. If. Picard. Lc Credit ouv/icr par Vassurance. P. 
Naiuiolz. \ tlief)ndical study, lidation entre les variations 
annucIUs du chomage, dcs gievcs ct des prix. C. Hist. W^ith 
rt'ieveru'e to a recent contribution by M. Ijucien March to 'the 
BuUciin dr la slaiisiiquc g hr c rale dc lo France. Prof. Hist 
concludes tliat “ le ehdmage volontaire cst d’autant plus fort que 
le ehojnago iiivolojitairo ost plus faible, et ruciproquement.” 
Between prices on the one hand and strikes and unemployment 
on the otiier lie (‘an discover no marked statistical connection. 
IVI. March re];lu‘s briefly in the lu^xt number. 

January -P' jnuiF \RY, 1013. La vcncric ouvrii'cc d'Albi. B. 
Lavergne. Jjc r memo (die ment dt la cemvention de Bruxelles 
ct les condiiions actuelles de la production sucrierc. J. Hitibr. 
L'insfitui international d\igriculture. E, BouRGiN. 

Journal dcs Economistes (Paris). 

December, 1912. Jja Ecglcnicntation dn travail des employis. 
Yvk.s Or^oT. Frederic List ct la polhnique autour de ses iddes 
cn 1912. Arthur Kaffalovici^. Le Rapport de M. Dalimier 

IMS] ' bkcisn* A 157 

et la di$cu8aip%%ia, dhi^mbf6 siir l& 'buigei des Ponies et deu 
^ Tel€gmphe8,\ CK. Maci^Iire. « 

Janijaev, 19l8. he MarcM financier en 1912. Arthur Eapfal6vich. 
Ij*Eco 16 autrichienne d'economie politique: Feilbogen. Eighth 

L'Economiste Frangais (Paris). 

January 11, 18 and 25, 1918. Lcs Pliice merits financiers, Paul 
Lbroy-Beaulieu. a study, in three articles, of the change in 
, prices of the leading French securities during 1012. 

Revue Economique Internationale (Brussels). 

November, 1912. L'Alhanie economique et politique a la veille de 
la guerre, A. Baldacci. Evolution des Chemins de Fer 
amcricains, F. W. Powell. Le Commerce rxtrrieur des 
E tats -Unis, P. E. Smets. Chiefly a discussion of the balance 
of trade. Les Emprunts chin o is. E. Cammaeuts. 

December, 1912. La Bourse d'Alcxandrie et Ic marchc des cotons 
Sgyptiens, L, Polier. La Culiure du coion dans i/Asie 
Centfalc Russe. M. Laminok. Lc Coion oriental et niMi- 
terraneen. Y. M. Goblet. 

January, 1918. Articles on the Panama Canal of considerable 
interest by three distinguislicd American writers. Jlistoire du 
Canal de Panama. William H. Burr. Lc Canal dc Panama 
au point de vue economique. Emory 11. Johnson. Lc Canal 
de Panama au point de vue miliiaire. Admiral Mahan. 

Archiv fur Sozialwissenschaft und Sozialpolitik (Tiibingen). 

November, 1912. Alie und none Einu'dnde gegen den historischen 
Materialismus. Achille Loria. Versch mehxing and gegen- 
seitige Penetration der Eassen und Nationolitciicn : Staiistiche 
Vntersuchungen. F. Savorgnan. An attempt to determine a 
coejffioient of “homogamy'* between races, colours, nationalities, 
etc. The illustrative statistics are mainly drawn from the 
Argentine, Budapest, and Boston. Die Arbeifsteilung im 

^istigen Lehen : Fine Unicrsuchung Hirer haupfsiichUchen 
FormeUf Geseize und Trichhrdfte. W. Hellpach. This study 
of the principle of division of labour is to be continued. Soziale 
Probleme des Dienstvertrages. Dor Dienstvertrag im Burger- 
lichen Qesetzbuch fiir das Deutsche Erich und im neuen 
schweizerisclien OhUgaiionenrccht. Pp. 74. E. Adler. Die 
gegenwdrtige Lage der Arhciter in Japan und das ncue 
Fabrikgesetz. K. Kuwata. 

Jahrbuchef fur Nationokonomie und Statistik (Jena). 

January, 1918. Zur Tlieorie der Statistik. Hellmuth Wolff. A 
review of various schools of thought on the philosophy of 
statistical theory. 

Annalen fur Soziale Politik und Oesetzgebung (Berlin). 

Parts III. and IV., 1912. Der Ansbau dor Erhschaftssteuer ah 
Besitzsteuer fur das Rei/fii. ■ H. Weissenborn. Qeburten- 


rii^hgan^ und 8ozialpoliiik. 0. Lakdsberg, Bergarbeiterschute 
' im Preussen und Oesterreich. P. BussOn. Das Lohndmter- 
gesetz. Constance Smith. Deals with the British Act of 1909 
relating to Trade Boards and Sweated Industries. Zur jungsten 
Bntwichhing der Arbeiigeher-Verhdnde, Gerhard Kessler. 

Zeitschrift filr V olkswiv^schafi , Sozialpolitik und Verwaltung 


Part VI., 1912. TJ^iirrsuchungen iihcr Auslcse und Anpassung der 
Arbeitcr, Richard Sorer. ' ' 

ScAentia (Bologna). 

January, 1913. The Sun-Spots. E. W. Maunder. A summary of 
the latest views of the astronomers on the periodicity of sun- 

Giornale degli Eeonomisti (Rome). 

September, 1912. ll primo annuarlo inicrnazionale di Statistica 
Agraria. U. Ki\jci. An introductory description of the annual 
which the International Institute of Agriculture has begun to 
publish. Jjd disirihuzionc della ricJirzza. L. Amoroso. A paper 
read to tlie e(^<jnoinico-statistical section of the Congress of 
Mathematicians last year. 

October. JjC (\)uL}n(niicarjioui ferroviarie in Cina. U. Benedetti. 
Tlie devolopniont of railways in China augurs well for her 
economic*. ])rogress. Monograjia di famiglia. G. Baglio. A 
Sicilian family budget. 

November-Decemher. L'azio^ie rccenle delV oro sui prczzi generali 
dclle iticrei. R. Benini. A severe criticism of Yves Gnyot 
leads to a rt^statenu'nt of monetary principles purporting to form 
a bridge l>etweeii the defenders and assailants of the quantity 
theory. I nterfcrrnzr r getfiio dellc imposie svgli increnienti 
di valore, B. Griziotti. 

January. Prohlcmi del Tesoro r della circalazione. G. DEL Vecchio. 
Gli odierni a-sprff/ dclV Kconoinia, agraria. C. dt Nola. Inter- 
esting statistics (d the world’s railways by G. Mortara, anjl a 
study on the j)urc* science of tinane-e by B. Griziotti are buried 
in the snuill print which now, unfortunately, conceals the 
greater part of the Giornale. 

La Biforma Social e (Turin). 

November, 1012. (Questions of definition and taxation are discussed 
exhaustively, in (ionnexion with Prof. Pisher s book on Capital 
and Income and Prof. Beligman’s Income-tax by Giuseppe 

December. The polemic against protected iron manufacturers is 
continued by L. Einaudi. 

January, 1913. The concejit of taxable income, vdth reference to 
Prof. Einaudi’s recent work, is the subject of an article by 
Achille TjOria. There is also an instructive description of the 
failure of a Socialist business (“cantina comunale*’) in an 
Italian locality. ^ 




Ashley (Annie). ' The Social Policy of Bismarck : A Critical 
Study, with a Comparison of German ard English Insurance Legis- 
lation. With a Preface by Gustav von Schmoller. London: 
Longmans, Green. 1912. Pp. ix-f95. 2s. net. 

[Birmingham Studies in Social Economics. III. To be reviewed,] 

Ashley (W. J.). Gold and Prices. London : Longmans, Green. 
1912. Pp. 32. Is. net. 

[Reprinted from the Pall Mall Gazette. Noticed in the Economic Joubnal. 
June, 1912, p. 358.] 

Baikd (W.). The One Pound Note: Its History, Place, and 
Power in Scotland and its adaptability for England. (Third edition 
revised ^nd brought down to date.) Edinburgh: Baxendine. 1912. 
Pp. 72. 2s. net. 

Boag (George L.). Manual of liailw^ay Statistics. London: 
Bailway Gazette. 1912. Pp. 185. 4s. net. 

[By the Assistant Manager of the Groat Southern of Spain Railway, who has also 
had railway experience in England, the Argentine, and Southern Nigeria. A 
discussion of principles followed by appendices of practical rnatorial.] 

Carlyle (A. J.). Wages. (Christian Social Union Handbooks.) 
London: Mowbray. 1912. Pp. 125, 2«. not. 

Chatterton (Alfred). Industrial Evolution in India. Madras: 
The “Hindu Office. 1912. Pp. 369. 

[This volume, by the Special Adviser for Industries and Commerce in Mysore, is 
a reprint of a number of articles on Indian industrial and economic questions. To 
be reviewed.] 

Dobson (G.), translated by. Company Eire Insurance in Bussia, 
1827-1910. St. Petersburg. 1912. Pp. 145. Large 4to., with 

[Published by the Tariff Committee of Russian Insurance Companies.] 

Henry (Egbert). Who Pays? The Beal Incidence of Taxation. 
London: George Allen. 1912. Pp. vii+70. 2s. 6d. 

[With some eccentric diagrams.] 

Leake (P. D.). The Use and Misuse of the Sinking Fund. 
London : Gee & Co. 1912. Pp. 19. 

[A paper read before the Chartered Accountant Students’ Society of London, 
dealing in part with the proper use of the sinking fund by municipal bodies.] 

Pratt (E. A.). Agricultural Organisation : Its Bisc, Principles, 
and Practice abroad and at home. London : P. S. King. 1912. 
Pp. 272. 3s, 6d. net. 

PROTHERO (B. E.). English Farming Past and Present. London : 
Longmans, Green. 1912. Pp. xiii4-504. 12s. 6d. net. 

[To be reviewed,] 

Seaton (B. C.). Power v. Plenty : Some Tlioughts on the Tariff 
Question. London : P. S. King. 1912. Pp. 164. 2s. 6d. net. 

[Tariff Reform ‘‘represents the poJicy of Productive power -a policy whose aim 
it is to develop all the resources of a State with a view to national ‘ independence ’ 
as opposed to national * Interdependence.’ ” The treatment of the subject is 




Shadwell (AaTHuii), Edited bv, Nelson^s Emcyolopiedia of 
JijtdustrialiBin. London : Thomas Nelson. 1918, Pp. 548* Is. net. 

pDhe editor of this oncyclopscdia has followed the wise course of including a 
comparatively small number of separate articles* but each of substantial length and 
by a distinguished contributor. For example, there are articles on Capital and 
Cost of Living by Prof. Ashley, Wages hy ilr. Bowley, Mtynphty&rs* Unions by Sir 
Hugh Bell, Methods of Industrial 2*cace by Prof. Chapfhan, Factory Law b}^ Mr, 
J, H. Greenwood, Hows of Lal^Mr by Mr. Ramsay Macdonald, Strikes by Prof, 
Nicholson, Lahoui and rolitics by Mr. Philip Snowden. To be reviewed.] 

Thomson (Mary Horner). Environment and Efficiency; A 
Study in the liecordR of Indubtrial ScHooIh and Orphanages. With 
a Preface by J. Tieiidel Hams. London: Longmans, Green. 1912. 
Pp. viii + lOO. 2.S. net. 

[Birmingham Studies in Social Economics and Adjacent Fields. I. <‘»The 
Studios in thi« Series,” which is under the editorship of Prof. W. J. Aahlev^ *'are the 
outcome of the inqinnos of students working for the Social Study Higher Diploma or 
for the Higher Degrees of the University ot Birmingham.” To be reviewed.] 

Trades for London and How to Enter Them. Revised with 
additions. Loiulon : Longmans, Green. 1912. Pp. 204. Is. net. 

[Comj)iled by the Approuticeship and Skilled FiTnployment Association. A 
valuable hamlbook of practical details in regard to a groat number of trades.] 

Walsh (Roueht),. The Principles of Industrial Economy, illus- 
trated by an jnqiiiry into the comjiarative benefitH conferred on the 
Htaie and on the Uommunily by Free Trade and Fair Trade or 
Moderate Protection. London: i\ S King. 1912. Pp. xiv-i-257. 
()«. net. 

[An advocacy of I^rotection. Tlio author contendH that, if all the wheat 
required by the United Kingdom wore grown within the country, tins would load to 
an additional creation of wealth amounting annually to J064,922,946.] 

Watson (ALtRun William). Friendly Society Finance considered 
in its actuarial aspect Loudon . C. k E. Layton. 1912. 
Pp.v 4-132, 

[Lectures delivered at the Institute of Actuaries, 1911 -12.] 

Winder (Phyllis D.). The Public Fecduig of Elementary 
Schoolchildren: A Rovitnv ol the General Situation, and an Inquiry 
into Birmingham e\perienc*t‘. With a Preface by Norman Chamber- 
lain. London- Longmans, Grt'cn. 1913. Pp. ixH-84. 2,s'. net, 

[Birmingham Studies m Social Uoonomiob. TI. To be reviewed.] 

American, , 

CoMAN (Katharim) Ecoiioiuic Beginnings of ilv* Far West: 
How we won the land beyond the Mississippi. Vol. I. Explorers 
and Colonisers. Yol. II. American Settlers. N(‘W York: The 
Macmillan Co. 1912. P]). \i\-f 1184-1x4-450. 17s. net. 

[A readable rather than a learned work.] 

Farnam (Henry W.). Bibliography of the Department of 
Econonii(‘s and Soeitdogy of the Carnegie Institution of Washington. 
1912. Pp. ]7. 

[The V Pepartmont has b^en engaged since 1903 on organising work entitled 
Oontril&tions to American Economic History.” 238 monogrHplis or parts of 
monoj^phs have boon prepared, 108 of which are unpublished. This is a complete 
list ol Jthe titles and author, s of those monographs.] 

Moulton (Harold G.). Waterways Dcrsus Railways, Boston: 
Houghton Mifflin. 1912. P{). xviii 4-468. $2 net. 

[Reviewed above.] 


Patten (Simon N.)» The Keconstr action of feconomio Theory, 
Philadelphia : American Academy. 1912. Pp, 99, 

[Supplement to The Annals of tlie American Academy of Political and Social 
Scunccy November, 1912. The thesis of this very interet>ting essay is not easily 
summarised. To be reviewed.] 

Kailway Economics. Chicago : University Press. 1912. Pp. 
446. 128. net. 

[A collective catalogue of books in fourteen American libraries, prepared by the 
Bureau of Railway Economics, Washington, D.C.J 

Kipley (William Z.). Kailroads: Kates and Kegulations. 
Jjondon: Longmans, Green. 1913. Pp. xviii-f659. 148. net. 

[An important and comprehensive treatise, to be followed shortly by a companion 
volume on Railways: Finance and Organization. To bo reviewed.] 

Stevens (William S.), Edited by. Industrial Combinations and 
Trusts. New York: The Macmillan Co. 1913. Pn. xiv + 593. 
Ss. 6d. net. 

[A oollaotion of first-hand materials, which ainn at putting within the reach of 
students the original documents relating to “ Pooling, Trust, Factors’, and Inter- 
national Agreements ; court decisions and laws against Trusts ; Trust methods of 
fixing prices, eliminating competition, and restraining trade ^ the dissolution plan.s 
of dissolved Trusts ; lease and license agroomciits of representative patent 
monopolicfi ; and the views of eminent business and professional tnen.” To be 

Upson (Lent Dayton). Sources of Muiucipul Kevenue in Illinois. 
Illinois : The University. 1912. Pp. 126. 75 cents. 

[ University of Illinois Studies in the Social Sciences. J 

Frenclt. ^ 

Bellom (Maurice). La Definition Legale del Tiivalidite en 
maticre d ’Assurance Sociale : Kcclierche d’une formule. Paris: 
Kousseau. 1912. Pp, 28. 

[Based on a comparison of the practice of different countries.] 

FisciiEL (Marcel-Maurice). Le Thaler dc Marie-Thcresc : Etude 
do Sociologie et d’Histoire Econoxnique. Paris: Giard & BrRTe. 
1912.. Pp. xxi-f 208. Fr. 5. 

[To be reviewed.] 

Guyot (Y'ves). La Gestion par FEtat et ks municipalit4s. 
Paris: Felix Alcan. 1913. Pp. viu + 437. Fr. 3.50. 

[Reviewed above.] 

Mahaim (Ernest). Lg Droit international ouvrier. Paris: Sircy. 
1013. Pp. 385. Fr. 6. 

[Lectures delivered before the Faculty of Law in the University of Paris. To 
be reviewed.] 

Mataja (Victor). La Ke^clame dans scs rapports avec les 
Affaires et le Public. Paris : Polmoss. 1912. Pp. 77. Fr. 2. 

[Translated from the^rman. Reviewed above.] 

Nooaro (Bertrand). Elements d ’Economic politique: Produc- 
'tion — Circulation. Paris: Giard. 1913. Pp. vii + 388. Fr. 6. 

[A text book, primarily intended for French law sbudenta in their first and 
second years.] 

No. 89.— VOL. XXIII. 





Raynaud (B.)- Vers le Salaire Minimum: Etiidc d’^conomie et 
de legislation induBtrielles. Paris: Eeoueil Sirey. 1913. Pp. xi 
-f-518. Fr. 12.50. 

[BihliotTUgue d* Economic politique et de Sociologie VI. Au exhaustive treatise 
on tbo subject. To bo reviewed.] 

' German. 

Bkek (M.). OciBohkilito des Sozuilisiiius in England. Stuttgart : 
J. H. W. Dietz. 1913. Pp. xii + r)12. 

[First part (pp. 222), 1760-1824; second part (pp. lOG) 1825-1864 ; third part 
(pp. 83) 1856-1912. To be reviewed.] 

Hernek (Heinrich). Ilafenahgaben und Schiffs-vermessung : 
ein Kritischer Hcifcnig zur Wurdigimg ihrer technischen, wirtschaft- 
lichen und statistisclien Bcdciitung. Jena: Gustav Fischer, 1912. 
Pp. vi+128. M. 8. 

[Prohhyne der Wcltwirtschaft XT. A tcclinieal, rather than economic, discussion 
of the dimeiiBiouB of shii)H and thoir regulation.) 

Herrmann (Eltse). Auslese und Anpassung der Arbeiterschaft in 
der Wollhutindusine. Munich : Duncker k Humblot. 1912. Pp. 
63. M. 1.80. 

[Published in the Shriften des Vereins fitr SozialpoHtikf being a further instal- 
ment of thoir V niersuchiingm Uber Amlcse und Anpassung {Bertifswahl und 
Berufsschicksal) der Ai’hciie^ in dc verschiedenen Zimigcn der Grossindustrie.] 

Kaiiler (Wilhelm). Die Bildung von ludiistriebezirken und 
ihre Probleme. Leipzig : Teubner. 1912. Pp. 27. M. 0.80. 

[From tbo Vortrdye der Gchc-Stiftxmg zu Dresden.'] 

Kuczynbki (11. ). ArbeiliRlohn und Arbeitszeit in Europa und 
Amerika, 1870~]9()9. Berlin: Julius Springer. 1913. Pp. vi-f817. 
M, 24. 

[A huge collection of facts and figures relating to wages and hours of labour in a 
great number of trades. To be reviewed |. 

Jacobi (Dr. Dorothea). Die gemeinnutzige Bautatigkeit in 
Deutschland, ihre kultiirellc Bedeiitung und die Grenzen ihrer 
Wirksamkeit. Munich: Duncker k Humblot. 1913. Pp. x + 152. 

M. 4. 

[Sohmollor fl Staats-und sozialwisseyisckaftliche Forschungeny Vol. 167.] 

JjEnz (Paul). Die Konzentration irri SeeschifPahrtBgeworbe. 
Jena: G. Fischer. 1913. Pp. viii-}-142. M. 4. 

[On capitalisation, monopoly, and competition, the tendency to concentration, 
etc., in tbo shipping trade. To be reviewed]. 

Manes (Alfred). Versiclierungswesen. Leipzig: B. G. Teubner. 
1913. Pp. xiv + 485. M. 11. 

Second edition, revised and enlarged of Professor Manes’ treatise on the origin, 
meaning, organisation, and technique of Insurance, both m general and in numerous 
particular forms. The first edition was published in 1905 and was reviewed in the 
Economic Journal, Vol. xv, p. 418. To bo reviewed.] 

Passow (liiCTiARD). Mutcrialien ftir das wirtSchaftswissensebaft- 
liohe Studiuin. 111. Warenborsen. Leipzig: Teubner. 1912. 
Pp. v-fl52. M. 2,50. 

[A collection of material relating to the rogulations of tbo German produce 


PoPPEBTLyNKBDS (JosKF). Die aUgerfleme N&hrpflicht als LSaung 
der spzialen Frage, eingehend bearbeitet und statistisch durch- 
gerechnet: mit einem Naohweis der theoretisdhen und praktisohen 
Wertlofligkeit der Wirtschaftslehre. Dresden : Carl Reissner. 1912. 
Pp. xvi + 813. M. 17. 

[latended as the programme practical policy. To be reviewed.] 

Pbeyer (W. D.). Die Arbeits- und Pachtgenoesenschaften 
Italiens. Jena: G. Fischer. 1918. Pp. 228. M. 6. 

[To be reviewed]. 

Ross (Lisa). Weibliche Dieiistboten und Dienstbotenhaltung in 
England. Tubingen: J. C. B. Mohr. 1912. Pp. viii + 99. M. 3. 

[Archiv fUr Sozialwissenscha/l tend Sozialpolitih. Supplement VIII. To be 

ScHMOLLEU (Gustav). Charakterbilder. Munich : Duncker & 
Humblotiy 1918. Pp. vii-f302. M. 7. 

[This is a collection of character sketches of dislinguished economists and 
German statesmen which Professor Sohmollcr has written from time to time over a 
considerable number of years. After East«*r of this year Professor Schmoller, at the 
age of 75, is to retire from the active ducios of lecturing and he offers this volume, 
primarly to his friends and pupils, as in the nature of ^ fard^ell gift. To be 

Sella (Emanuel). Der Wandel dew Besitzes : Versuch einer 
Theorie des Reichtums als OrganisAius. Munich : Dunckor k 
Humblot. 1912. Pp. iv + 98. M. 2.50. 

[Translated from the Italian.] 

SoMBART (Werner). Studion zur Entwicklungsgeschichte dea 
modernen Kapiialismus : Vol. I. Luxus und Kapitalismus. Munich: 
Duncker & Humblot. 1913. Pp. viii-f 220. M. 6. Yol. II. Krieg 
und Kapitalisnuis. Munich : Duncker^ & Humblot. 1913. Pp. 
viii4-232. M. 6. 

[These are the first two iustalmonks of the new edition of Professor Sombart’s 
Modeme Kapitalismus. To bo reviewed ] 

Stammhammer (Josef). Bibliographie der Social-Politik : Band 
II. enthaltend die Literatur von 1895-1911 und Erganzungen zu 
Band. I. Jena: Gustav Fischer. 3912. Pp. vi + 8Bl, M. 30. 

[This enormous compilation— tlie above volume must contain more than 
20,000 titles — brings up to date this first volume, which was published in 1896. It 
deals Chiefly with labour and with social questions connected with labour, and does 
not attempt to cover the whole field of economics. The literature of all countries 
is classified, and the method of classification and the cross-references seem admir- 
ably adapted to make it as useful as possible to a student. Articles in magazines 
and journals are fully catalogued. The volume should form a valuable work of 
reference for libraries.] 

ZiZBK (Franz). Soziologie uiuJ Statistik. Munich : Duncker k 
Humblot, 1912. Pp. 47. M. 1.50. 


Caronna (F.). La Teoria della erenzione tributaria dei redditi 
minimi. Palermo: Reber. 1913. 

Fanno (Marco).' Le Banche e II Mercato Monetario. Rome: 
Athenaeum. 1913. Pp. 395. L. 8. 

Gini (Prof, Corrado). Contributi atatistici ai Problem! dell’ 
Eugenica. Rome. 1012. Pp. 112. 

[Reprinted from the Rivista Italiana di Sociologia.] 


Graziani (A.). Principii di Economia Commerciale. Naples : 
Alvano. 1913. 

SafcRK (Aktitro). IMutuiale di Storia del Commercio. Vol. I. 
Dalle Origini alia Kivoluzione Francese. Turin : S. Lattes. 1913. 
rp. 459. 

Tknerklli (F/G.) Lc Finanze IfJomunali. Milan: Society 
Editrico Lihraria. 1913. Pp. 450. 

fA study of the iiir-ome aud expenditure of Italian Communes.] 

Statist ique doTj)()graj)hique des grandes villcs du monde pendant 
aniu'es 1880 1009. PaK. II. Amsterdam: J. Muller. 1912. 
Pp. 115 

[Published by the IVtreau municipal de StaHsqUfi d' Amsterdam. Part I dealt 
with the population, birth rate, death rate, and infantile mortality in European 
towns. I'his partcl-'iils witli twelve towns in Asia, three in Africa, nine, in America, 
und three in Australia..] 

CJatalogue de I'lnstitut Nobel Norv{'gi(‘n. T. Litt/u’nture Pacifiste. 
Kristiauia. (dbondon : Willimus k Norgaie.) 1912. Pp. 238. lO.s. 

WoiTLiN (Nils). Den Bvonska Jordstyckningspolitiken i de 
lR:de otdi 19:de Arhundradena. Stockliohn : P. A. Norstodt. 
1912. Pp.xiii4-852. 


JUNE, 1913 


It is now some thirty years since I began to interest myself 
in economic history, under the converging influence of three very 
difierent men — Stubbs, Toynbee, and Schrnoller. And, looking 
back, I am conscious of a great change in the academic atmo- 
sphere. I should not like to speak for Germany or France or 
Russia,, or the other countries of the European continent; but 
for England and America this much can safely be said : that 
the study of specifically economic history is no longer an 
individual eccentricity, calling almost for apology; it is now a 
recognised and respectable scholarly pursuit. And this is 
evidenced by a circumstance the very mention of which may 
cause our foreign friends to smile, but which is quite significant 
in British circumstances : economic history has been given a 
place in our university examinations. At the Universities of 
Cambridge and London, and at most of the newer Universities, 
examination papers are every year set in the subject, and some 
hundreds of students do their best to answer them. Con- 
sequently there is now something like an academic career opening 
before scholars who devote themselves to this particular study. 

But there is another and perhaps as significant a sign of 
the times, about which our foreign friends may like to be 
informed. During the last few years there has come into exist- 
ence in Great Britain an extensive organisation called the 
Workers’ Educational Association. It is an association of trade 
unions, co-operative societies, adult schools, and other working- 
class bodies, in alliance with the universities, to provide for work- 
ing men and women an education worthy of citizens. The expenses 

^ Presidential Address at the Economio History Section of the International 
Congress of Historical Studies in London, April 3, 1913. 

No. 90.— VOL. xxiii. N 




are met, in large measure, by grants from the Board of Education, 
from the general taxation of the country. Now it is a 
remarkable fact that the subject most generally studied by these 
classes of working people is Economic History. Out of some 
102 systematic courses of lectures and tutorial classes in the 
session 1911-12, almost half, viz., 49, were on Economic History. 
Economics or Economic 'llieory came far behind, with 29; and 
no other subject brought togctlier more than four or five classes. 
In many cases the classes proceed, in a subsequent year, from 
economic history to economic theory ; in others they advance 
from a more general to a more intensive study of economic 
history itself, or go on to some other aspect of history — for 
instance, the constitutional. 

This noteworthy state of affairs would seem to have arisen, at 
the outset, partly from accident, and partly from the free choice 
of the working men responsible for the first “tutorial classes.” 
What these working men wanted w^as, naturally; some light on 
the pressing social problems of the day; but they felt, as one 
of them has told me, that to approach them historically would 
give “a sense of proportion and perspective,” and would make 
it easier to tackle more controversial questions afterwards in an 
unpartisan spirit. The example thus set has since been fol- 
lowed, simply because the policy has justified itself in experi- 
ence. It would seem, also, that by many working men economic 
history has been welcomed not only as a preparation for political 
economy, but also for its own sake : because it seems to come 
nearer to answering the questions in which they are interested 
than the particular kind of economic theory that is presented to 
them by most English economists. 

The serious study of economic questions, whether historically 
or not, by the elite of the working classes is bound to have large 
consequences. So far the Workers’ Educational Association has 
been able without difficulty to maintain an independent and 
unpartisan position. In this respect it has been more fortunate 
than the only contemporary working-class educational movement 
with which, for extent, it can be compared, namely, the network 
of popular lecture courses organised in G-ermany by the Socialist 
party. The educational work of the German Socialist party — 
and by that I mean not so much its propagandist activity, which 
naturally stands in the forefront, as its zeal to awaken working 
men and women to intellectual interests generally, whether 
through natural science or art or history — this work has hardly 
attracted as much attention as it deserves. Yet party zeal is 


hardly separable from party narrowness ; and the Workers’ 
Educational Association gains something frcm its freedom from 
entangling connections. 

All this increasing attention to economic history, alike in 
working class and in undergraduate circles, makes it imperative 
there should go on, side by side with it, the keenest and most 
critical scientific research in every part of the field. The danger 
of over-hasty formulation, the dauger of undue emphasis on 
particular facts, are certainly not less in these days of social 
IX)litics than they were in the days when ecclesiastical history, or 
in those latei> days when constitutional history, led the way 
in becoming a subject for specialised teaching. Q'lis custodiet, 
it may be objected, custodes Professors themselves have 

their bias and their passions, the more dangerous because they 
are commonly^ unconscious. We greatly deceive ourselves if we 
suppose that historical, political, legal, and economic subjects 
attract attention, even in ovr calmest seats of learning, merely 
on account of, or in proportion to, their scientific sociological 
interest ; that the typical schola^* is objective and detached from 
contemporary motives. As a matter of fact, the bulk of the 
important work done at the universities in these fields has 
always been inspired by interest in the problems of the day ; and 
“tendency is only a matter of degi-ee. So far as a remedy is 
possible, it is to be sought in a consciousness of the danger. 
The way to overcome bias is to realise what our own individual 
bias is likely to be, and to suspect ourselves accordingly. Help 
also wdll be given by a multiplication of investigators, so that no 
dubious conclusion shall long remain uncriticised by a brother 
scholar of differing “tendency.” And if the critic comes from 
another nationality, there is. even more chance that he will see 
the common subject-matter with fresher eyes, and eyes that, if 
prejudiced at all, are prejudiced in a different direction. 

This thought brings me to a theme on which it may not be 
inappropriate that 1 should dwell for a few minutes on this 
occasion : the strikingly international character of recent inves- 
tigation in this particular subject. It is surprising how large a 
part of the best work — certainly this is true of English economic 
history — has proceeded from foreign scholars. This has been 
the result of their essentially practical purpose. They have 
turned with interest to the social history of a land not their own 
because it preceded their country in its development, and might 
therefore indicate dangers to avoid or precedents to follow. Thus 
Marx and Brentano and Held and Schufze-Gavernitz and Levy 

N 2 




have examined the industrial history of England, because Eng- 
land preceded GTermany in passing through “the Industrial 
Kevolution.’* And while Germans have led the way in the 
scrutiny of manufacturing development, Russian scholars, in 
more recent days, have thrown themselves with eagerness upon 
agrarian history. I need but mention such names as Kariiiew and 
Eoutchisky and Kovalevsky for their French inquiries, Vino- 
gradofif and Ravine for their English. The obvious reason is that 
Russia has been confronted of late with the prospect of a vast 
agrarian fransformation, and her patriotic scholars crave for every 
possible glimmer of light upon their j^ath that the experience of 
other countries can be made to furnish. That they may find such 
light we must all hope; but, in any case, their keen curiosity 
is of great service to the history of the countries they turn their 
attention to. 

I am aware 1 am entering upon a somewhat perilous topic if 
I attempt now to illustrate the international character of our 
study from a subject that engages just now a good deal of atten- 
tion in this country, viz., the ownership and tenure of land. I 
realise that the whole group of problems which it includes is still 
full of obscurities ; but it may be possible to state the present 
position of historical investigation in a way to command the assent 
of scholars. In what I sha^ll have to say 1 shall have England 
chiefly in mind. But it is certain that in the Middle Ages there 
was a substantial similarity of social conditions over a large part 
of Western Europe; and it is from that fact, as we shall see, 
that w^e get sometimes the greatest assistance and sometimes the 
greatest hindrance in our inquiries. 

It is evident, to begin with, that the historian of English land 
has no longer the same clear and well-defined starting-place as 
his predecessor set out from, forty years ago. Then the historian 
could assunui that he knew with wdiat conditions the development 
began at the outset of English history, as surely as he knew in 
what conditions it has ended ; his task w^as to fill in the inter- 
mediate stages. What that starting-place was it is hardly neces- 
sary that 1 should give time to describing : it was “the farmer 
commonwealths, “ displayed with all the emotion of admiration in 
the opening pages of Green, and clearly discernible beneath the 
cautious phrases of Stubbs. These occupied the centre of the 
picture : differences of rank and w^ealth and status all fell into a 
dim and easily-forgotten background ; and the problems for the 
historian were conceived to be these : how did the freeman sink 


into serfdom ; how did landowning communities fall into subjec- 
tion to manorial lords? 

Now it is significant that nothing of all this had suggested 
itself to English historians so long as they confined themselves to 
English evidence; no trace of it is to be found, for instance, in 
the pages of Hallam. It was imported into English history by 
Kemble, as a result of his German studies : he assumed, with 
entire good faith, that what was apparently proved for Teutons 
at home must have existed among Teutonic peoples in Britain, 
and he looked round for English evidence which would fit into 
the construction. It was imported again, and with more 
authority, by Stubbs. No one can look at the footnotes of his 
earlier chapters without seeing that he builds on the foundations 
assumed to be laid for Germany by Maurer and Waitz. 

The reputation of German scholarship was deservedly so high 
that, so long as German historians were unanimous, no criticism 
from outside carried much weight. And for a time the Maurer- 
Waitz tradition went on establishing itself only the more im- 
posingly, in the economic histories of Inama and Jjarnprecht, and 
in the legal history of Brunner. The acute criticism by Fustel 
of the whole range of Homan, Merovingian, and Carolingian 
evidence, the essays of Denman Boss, the realistic treatment of 
the English material by Seebohm, were alike waived on one side. 
Instead of asking how room was to be found in the picture for the 
facts called attention to by Fustel and Seebohm, it was common 
to chara>oterise these scholars summarily as isolated advoc’.ates of 
a rival theory — the theory that the manor grew out of the Roman 
country estate. And the more we realised from Hanssen and 
Meitzen and from Seebohm himself the system of cultivation in 
thew Middle Ages, with its open fields and intermixed holdings and 
rotation of crops and common pasture, the more obvious it seemed 
that the Roman villa could hardly by itself account for Grundherr- 
schaft, seigneurie^ and vuinor. 

No fresh advance was possible until a new movement took 
place among German scholars themselves. It is notorious that 
since 1896 such a movement has made its ap]-)earance. I need but 
mention the names of Hildebrand and Wittich and Knapp. These 
writers have compelled a reconsideration of the accepted inter- 
pretation of Tacitus and the Barbarian laws and the early land 
charters and the capitularies. Moreover, it is no longer plausible 
to say that the Waitz-Brunner interpretation of the period a.d. 
400-800 must be correct, inasmuch as it fits in with their inter- 
pretation of the period a.d. 800-1000; since Dopsch is now 




showing the extreme insecurity of some of the apparently most 
firmly established propositions even as to Carolingian institutions. 

The authors I have just named are by no means as yet in 
possession of the field ; the old positions are still being defended ; 
and we must certainly not be in a hurry to proclaim any large 
new generalisations. If I venture to sum up what seem to me 
the conclusions suggested so far. it is only in the most tentative 
way. They would be these : That from the earliest historical 
times, in (hiiil and Germany, very much land w^as owned indi- 
vidually, and that wealth on the one side and slavery and personal 
dependences on iho other were always very important factors in 
the situation; that in Nenstria and the other more completely 
Romanised parts of the Colto-Germanic world, the Roman villa 
was very generally one of the main elements, perhaps the 
dominant element, in the development: and that the seigneurial 
structure of the western side of the Carolingian Empire had a 
considerable influence on the somewhat subsequent development 
of the eastern side; tluit, even in Germany, communal owner- 
ship of land w^as never a fimdamenta.l or generally pervasive social 
institution; that there wais something very n»uch like large 
private estates, worked by dependents and slaves, from the very 
earliest days of Teutonic settlement; and that “the common 
freeman,'’ tliougli j)r()bably in a sense the basis of iho legal system, 
was neither so })easant-like, ‘nor so uniform, nor so communal, 
as we used to suppose,. There is much to be done beford the 
ditTereni })arts of the pu/.zK'. can be satisfaxdorily fitted together; 
possildy tljcn*, were large dilTerences, not imly as between Nenstria 
and Austrasia, but also within the purely German territory itself. 
Moreover, the whole specifically agricultural side — the inter- 
mixed strips and all tlicv involve- has still to be brought i^to 
relation to the l(‘gal side of the problem. We cannot fail to be 
struck by its omissioji even in so substantial a treatise on the 
lines of Enstel as that of See. As to England, 1 am afraid that, 
in spite of the labours of Maitland and Vin^ogradoff, we must wait 
for the solution of our local problem until a solution has been 
reached of tlie larger Continental problem. But this much is 
already highly probable, viz., that w^e shall not find anything that 
can fairly be called a general communal system of landowning, 
combined with a substantial equality among the majority of 
the people, under conditions of .settled agriculture. To find it 
in any seiise we sliall have to go back to an earlier and “tribal ” 
condition ; if, indeed, we sliall find it there. 

For some time to come it will probably be advisable for 


economic historians, in their popular expositions of agrarian 
development, to content themselves with starting with tte manor 
(Grundherrschaft, seigneurie) as we find it over a large part of 
England, France, and Germany in, let us say, the thirteenth 
century, without committing themselves to any very confident 
assertions as to how it came into existence. It is true we have 
been warned by Maitland not to speak too freely of the “typical “ 
or “normal” manor; he has pointed out how rich a diversity of 
conditions is to be found existing contemporaneously even among 
English villages and hamlets, so that it is not at all difiScult to 
find abundant cases quite irreconcilable with each of our usual 
generalisations. Yet certain features are so commonly found in 
mediaeval village life — features sufficiently indicated by such terms 
as demesne and yardland (hufe) and week work — as to be t 3 ^pical 
of the greater part of rural existence over a large portion of 
Western Europe. Everywhere half or more of the tilled land was 
in the hands of small peasant cultivators. The terms on which 
most of them occupied their holdings w^ere, indeed, onerous ; and 
we must take care not to depict their condition in colours too rosy. 
Yet there they w^ere, alike in Central and Northern France, in 
Southern and Middle England, in Western and Central Germany. 
But to-day we find, of course, by no means the same uniformity 
on comparing the throe countries. Over a large part of Germany 
and France the place of the serf cultivalors of the Middle Ages 
has been taken by peasant proprietors. Agricultural statistics are 
everywhere curiously defective ; but it is jiretty safe to say that in 
France soraewdiere about one-half, and in Germany about tw^o- 
thirds of the land is now in the hands of peasant proprietors. 
Such large properties as are now found in France seem to be 
pretty widely distributed over the whole country ; in Germany, on 
the other hand, there are considerable provinces, such as Bavaria, 
where there are practically, over great stretches of territory, no 
large properties at all. But wdien wn pass over to England we 
find to-day exceedingly few peasant properties. The great bulk of 
the English land belongs to large landowners, not cultivating 
their land themselves or through a bailiff, as is the usual practice 
with such large landowmers as there may be in Germany or 
France, but letting out almost all of it to comparativ(3ly large 
tenant farmers, who employ agricultural labourers dependent on 
wages. The question to which I now turn is the explanation of 
this striking singularity in English development. 

I do not propose to estimate the relative merits of the English 
and Continental systems. It is noticeable that writers on agri- 




cultural j^conoiiiics in Germany usually assume that a system of 
peasant proprietorship — especially when it is so diversified that 
the landless labourer, if he exists at all, has a good chance of 
rising to be a small landowner himself — is obviously the more 
desirable, on general social grounds; though they throw in, by 
way of concession, the observation that a certain number of large 
landowners n)ay possibly be of use in leading the way in the 
improvement of agricultural methods. Writers in England are 
wont to take the opposite jK)int of view : to assume that the 
English system is the better as regards economy of agricultural 
production ; though they in their turn may throw in an observa- 
tion, by way of concession, as to the social benefits of peasant 
proprietorship. I leave all these questions on one side, and confine 
myself to the purely historical problem, how the difference between 
England and the Continent actually came about. 

On the external facts of the development in England we are 
much better informed to-day than w^e were evcm twenty years 
ago. ''.rhe works, for tlu^ earlier centuries, of Page and Gay and 
8avine and Tawney ; foi’ the later centuries, of Hasbach, Slater, 
Johnson, Prothero, Gonner, and the Hammonds have made 
tolerably clear almost every one of the })rocesses involved. The 
first two of the names I have recit(‘d — Page and Gay — are 
American scholars; the third, Ravine, a Piissian scholar; and the 
large positive additions thesfe three have made to our knowdedge 
illustrate what I have already said as to the value of a foreigner’s 
freshness of vision. Thanks to these, and to the others I have 
mentioned, wdiile theie are still some outstanding obscurities as 
to co])yhold and leasehold, in the main tve know what happened. 
We must agree with lecent writers in describing the modt*rn 
reorganisation of rural England on the lines with which we are 
now familiar as tlie work of “the governing class that ruled 
Ejngland during the last century of the old rnjimc/* We might add 
that this class commonly believed that what w^as for their personal 
advantage was also for the advantage of the community ; that by 
far the greater part of the rearrangement of owmership and tenure 
took place under legal forms ; tliat it involved on the ]mrt of “the 
governing class ” both enterprise, and expenditure ; and that the 
more obviously injured interests received some pecuniary or other 
comj>ensation. Whatever additions, how^ever, we may think fit to 
make, it is still true that it was “the governing class” that was 
responsible. But this is no answ^er to the question why it w^as 
in England fhat this singular transformation took place. For, at 
the period from which w^e start, other countries had an upper class 


of much the same sort as England ; and there is no reason to 
believe that the English upper class was by nature either more 
selfish oi^more enterprising. 

Let us see if any light is cast upon the matter by the experi- 
ence of other countries. And let us begin with the explanation 
of the introduction of the present English system which seems to 
lie on the surface. No one can read eighteenth-century history 
without being continually reminded of the widespread zeal in 
England among the upper classes for the im})rovement of agri- 
cultural methods. We learn all about Arthur Young, his eulogy 
of ‘‘spirited*’ landowners, and his abhorrence of open fields and 
commons. But when these facts are adduced to “explain” the 
English deveIo])ment, it should at once occur to us that there was 
a )>recisely similar movement in France, the same enthusiasm for 
agricultural science, the same formation of agricultural societies. 
In France, as in England, it was deemed enlightened in govern- 
mental circles to abolish common rights and carry through enclo- 
sures ; and the French edicts for these ])urpose8 were the direct 
outcome of the re]>resentations of the agricultural societies. Yet 
the “agronomes” had nothing like the same influence in France 
as is sometimes ascribed to them in England. 

Writers who have gone beyond this first and most plausible 
explanation have sometimes been inclined to lay stress on the 
influence of the economists, at any rate on the final stages of the 
movement in England. With the one striking exception of John 
Mill, the economists of the first half of last century favoured both 
large ownership and large farming. We know how Bcntham 
“thought the spectacle of an enclosure one of the most reassuring 
of all the evidences of improvement and happiness ” ; we know 
how McCulloch described the agricultural system of his day avS 
“the powerful spring which has contributed more })erhaps than 
any other to carry our commercial and manufacturing prosperity 
to its present unexampled height,” and how he warned the people 
of his generation not to give “the smallest countenance to any 
scheme either for dividing estates or for building cottages on 
wastes ” ; we may recall how Porter, the statistician of Free 
Trade, condemned Goldsmith off-hand for “so ignorantly” 
deploring the disai)pearance of the peasantry. Such encourage- 
ment from the economists in one generation, like the encourage- 
ment from the agronomes in the preceding generation, must have 
given additional momentum to the forces of change : a modest 
landowner, who took his economics from its accredited exponents, 
would carry through enclosures and buy out small owners and 




pat .farms together with a glow of moral satisfaction. And yet 
we can attribute as little primary importance to Political Economy 
as to Agricultural Science ; for the plain reason that itswoice was 
heard as distinctly and much earlier in France. It was, I 
need hardly say, the French Economistes of the eighteenth 
century who su))plied the postulates and sketched the ground-plan 
of the later orthodox Political Economy of England : and one of 
the services of the Kiissian scholar Kareiew has been to remind his 
readers that the whole irend of thought of the Economistes was 
opposed to peasant fanning. Quesnay, in his famous Maxims, 
had laid down ihut “lands devoted to corn crops should be brought 
together, as far as ])ossible, in large farms, managed by well-to-do 
agriculturists,” since “it is not so much men as capital that 
needs to be attracted to the country.” The tripartite division of 
the agricultural population into landlords, capitalist tenant- 
farmers and wage-eaining labourers, which we find assumed by 
Adam Hinith and Picardo, and which we are wont to explain as 
the unconscious reflex of contemporary conditions, appears just as 
clearly in the much-read writings of the Economistes. There it 
is presented as the obviously best arrangement, inasmuch as 
it promoted the greatest net produce : and this was at a time when 
the large ten«nnt-farmer, ihough here and there he could be found, 
was by no means so characteristic of France as he was fast be- 
coming of this country. When the princes of Savoy were carrying 
through that exproprialion of the seigneurs which afterwards 
served as a potent example for France, “}>hysiocratic ” argument 
did what little it could to stay their hands. Bead the Reflections 
of the “godlike ” l^irgot, wdth their dogmatic assertion of the need 
for “ca})italistes cntrcf>reneurs de culture,” and of the j)arallelism 
of manufacture and agriculture, both requiring the separation of 
“entrepreneurs” from “simples salaries”; and one will realise 
that the essentkil f)rinciples of English “high-farming” received 
their earliest and quite conscious formulation not in England but 
in France. And yet, again, the doctrine had obviously nothing 
like the same effect in France as might jdausibly be attributed to 
it in England. 

The explanation of the difference between England and other 
countries is sometimes sought for in heroic acts of continental 
legislation. In ])articular, two episodes have engaged admiring 
attention : the land legislation of the French Revolution and the 
legislation in Germany of Stein and Hardenberg. But as to 
France, recent research has confirmed in sxibstance the view of 
de Tocqueville, and has shown that the Revolution made no funda- 


mental material change in the general position of affairs. The 
long and heated controversy on the subject finds its explanation 
in the ambiguous word “proprietor.” Probably not much more 
land was held after the Revolution by peasant “proprietors ” than 
was held before by “ censitaires ” and other classes of customary 
tenants under their respective seigneurs. Their position was sub- 
stantially the same — with all the complicated technical and 
practical diversities and obscurities — as that of copyholders in 
England. Who was the “owner” of their land was a question 
which could not have been answered in the feudal ages in the 
modern sense, since ownership in the modern sense did not 
generally exist. The seigneur him.self in legal theory was a 
“tenant” of the land, holding it of the King or of some other 
suj>erior lord. But when the feudal theory died away, and it came 
to be held that there must somewhere he an “owner” for ench 
piece of land, the question who owned the ccnsitaire's or copy- 
holder’s land might be answered in two op])osite w^ays. Owner- 
ship might be said to be vested in the lord, subject to the rights 
of the censitaire, or in the censifairey subject to the rights of the 
lord. If we take the former view’ — possibly the view most gener- 
ally current among lawyers — the French Revolution, by abolish- 
ing the lord’s claim to certain dues, converted tenancy into owner- 
ship, and so created [)easant proprietor sluj). But the latter view^ 
was so natural even before the Revolution that those censitaires 
who could not be dispossessed so long as they paid their dues, and 
who could dispose of tlieir holdings ])ractically as they })leased — 
and of these there were many — were already commonly spoken of, 
in popular parlance, in administrative reports and even in some 
of the law books, as “])roprietors.” The rough-and-ready estimate 
of Arthur Young that small owners held one-third of the land is 
confirmed by the most recent statistical researches based on the 
tax-rolls. Thus, according to Ijoutchisky, peasant “proprietors” 
held 30 per cent, of the land of the Ijaon district before the 
Revolution ; wdiile the similar researches of l^loch assigns to them 
as large a share in the Orleans district as i4 per cent. 

What the legislation of the Legislative Assembly and the 
Convention did for these “proprietors” was to put them into an 
easier position by freeing them completely from scigneurial dues, 
and so to enable them the more successfully to maintain them- 
selves during the coming century. At the same time it converted 
into proprietors a good many occupiers of land whose tenant- 
right had not hitherto approached so nearly to ownership ; like 
the holders of the terminable leaseholds characteristic of Brittany. 




to the effect of the sale of the confiscated lands of the church 
and of the emigres, that is a question which cannot be regarded 
as so nearly approaching definite solution. Recent investigations 
seem to show that, though the lion’s share went to the bour- 
geoisie, a good many of the peasants, and even of the mere 
cottagers, were able to acquire small portions. So that the net 
effect of the Revolution was both to strengthen and also some- 
what to increase peasant proprietorship. But it would not have 
been able to do this if a population of peasants, whether small 
owners or customary tenants, had not still remained on the soil. 
The contrast with England where, by this time, according to 
Arthur Young, “small properties** were “exceedingly rare,’* is 

The Stein-Hardenberg legislation is commonly thought of in 
England as having created a |)easant proprietary in Prussia; and 
a desire is soinetiyaes expressed that a statesman would arise in 
this country strong enough to follow their example. But, when 
we look into it, w’e discover that it effected, in a much more 
limited way, what w^as effected in France : it improved the 
position of many peasants already planted on the soil ; it did not 
place them there. The really “epoch-making” book of Knapp 
makes it very clear that the Prussian measures were “very far 
from being models of social legislation.” We might already have 
guessed this if we had reflected that the provinces concerned 
were part of that “Ostelbien,” w'here — from the point of view^ of 
admirers of peasant proprietorship — conditions have for some 
time been very markedly inferior to those in any other part of 
Germany. Those peasants who w-ere converted by the measures 
of Stein and Hardenberg into independent proprietors had to 
surrender from a third to a half of their holdings in order to 
compensate their lords for the loss of their labour semces ; and 
the privilc'ge of enfranchisement was limited to “peasants” 
(Dauerti) in the narrowest provincial sense of the wxud, viz., to 
those whose holdings w^rc worked with a yoke of oxen. It v;as 
limited, that is to say, to the larger holders; to those wdio in 
medueval England were called “full villeins” and “yardlings.” 
Smaller customary tenants — from “ half-yardlings ** (to use, an 
English term again) dowm to the various grades of cottiers — w^ere 
disregarded. These — from the operation of economic forces and 
the exercise of the legal rights of their landlords — soon fell into 
the position of landless labourers, compelled, in order to secure 
a livelihood, to work on the Ritterguter (or gentlemen’s estates). 
Knapp does not hesitate to say that the exclusion of small holders 


from the opport unity of enfranchisement, and the contemporary 
withdrawal of the protection they had previously received from 
the government (to this I shall return) constituted the compen- 
sation, insisted upon by the landlords, for the sacrifice of their 
previous legal claims upon the larger holders. The estates of the 
Junker were enlarged ; and at the same time they were enabled to 
dispense with the services of their larger tenants by having this 
new class of landless labourers put at their disposal. 'I’he class 
whose ill-fortunes in England have lately been set so poignantly 
before us — the class represented by the agricultural labourer — 
was precisely the class that came off worst in Prussia also. 

The case of Prussia does, however, throw some light on the 
historical problem as it presents itself in England. How came 
it that in 1807-11 there were still so many peasant tenants in 
Prussia? The answer is to be found in large measure in the 
policy of “Protection of Peasant Land,*’ pursued by the rulers 
of Prussia, as by the rulers of Austria and other paternal princes 
of the eighteenth century. The edicts issued by the Prussian rulers, 
almost as soon as they had freed themselves xroni the cmitrol 
of their provincial parliaments, and actually enforced from 1749 
to 1808, prohibited any decrease in the extent of land held by the 
peasants. They said nothing of any legal rights the peasants 
might possess, for the obvious reason that the majority of them 
[>ossessed at most only a life interest. So far as the Government 
was concerned, the lord might put in whom he pleased as tenant, 
but he must not add a j>easant holding to his demesne. The 
policy, which was undoubtedly successful in achieving its object, 
was based not on humanitarian grounds but on reasons of State : 
a decrease in the number or size of peasant holdings was believed 
by the Government to be bad for the revenue and bad for the 
army. It gives one a curious sensation, after reading the careful 
expositions which Knapp has written of Hoheuzollern policy in 
the eighteenth century with his eye fixed exclusively on Prussia, 
to turU to the agrarian troubles in England of fhe Tudor and 
Stuart times. Listen to Lord Bacon, writing a century and a 
half before Frederick the Great. “When,” he says, “enclosures 
began to be more frequent, whereby . . . tenancies for years, 
lives, and at will, wdiereupon much of the yeomanry lived, were 
turned into demesnes . . . the king (Henry VII.) knew full well 
. . . that there ensued withal ui)on this a decay and diminution 
of subsidies and taxes ; for the more gentlemen ever the lower 
books of subsidies.” Moreover, Bacon continues, “the principal 
strength of an army consisteth in the infantry ” ; and “if a state 


run most to noblemen and gentlemen, and the husbandmen and 
ploughmen be but as their workfolks and labourers . . . you may 
have a good cavalry but never good stable bands of foot.” The 
Tudor and Stuart legislation, prohibiting “the letting-down of 
houses of husbandry,” was of precisely the same character as the 
legislation of enlightened autocrats on the Continent a century 
and a half later, like that, it disregarded the legal question of 
the husbandman’s tenure, and probably for the same reasons: 
that his legal right was either weak in itself, or afforded scant 
protection against social or economic pressure. It came earlier 
than the parallel legislation abroad, because the growth of the 
woollen industry furnished in certain districts of England a 
powerful motive for the incorporation of peasant holdings into 
estates managed on capitalistic lines long before a like tempta- 
tion presented itself in Germany. Tawney, the most recent 
investigator of the j^eriod, concludes that the efforts of the 
English government did “mitigate the harshness” of the earlier 
enclosing movement. I should myself be inclined to conclude 
that the destruction of the old agricultural system would have 
gone much further even in the Tudor period but for the check 
imposed by the executive. And it is signilicant that the last 
serious attempt to enforce this check was made by the Sluart 
Council in the very period w'hon, for the last time, it was able 
to carry on government free from the control of Parliament 

This last reflection brings us to the heart of the matter. All 
the freshly-acquired information as to the course of events in 
England and abroad confirms by additional considerations wdiat 
Toynbee said as long ago as 1881 : “the present distribution 
of landed property in England is in the main due to the 
system of political government which made us a free people ” ; 
in other w^ords, to the establishment of parliamentary govern- 
ment in the seventeenth century. Parliamentary government, 
in the circumstances of the time, could only mean the rule of the 
landed gentry ; and these w^ere led, by the strongest motives of 
political zeal and personal interest combined, to widen and 
tighten their hold upon the land. And the local authority of the 
squires as justices of the ^>eace, which Gneist so oddly christened 
“ Self-government ” in order to contrast it with bureaucracy, was 
but the reverse of the medal of which parliamentary Self-govern- 
ment was the obverse. Those who think that England could 
have had the one without the other might be referred to the 
impartial pages of the French publicist Boutmy. 


The growth of the mercantile and monied interest gave addi- 
tional impetus to the transformation of rural life by adding enor- 
mously to the wealth available directly, and indirectly through 
marriage, for the rounding-off of country estates. There were 
wealthy city men in France also ; but the movement of capital 
countrywards was less than in England because the inducement 
was less. The withdrawal from the country gentry in France of 
all powers of local administration went on pari passu with their 
loss of influence upon the central government : both losses made 
the position of a country gentleman less desirable. And the very 
characteristic of our social system of which we have been most 
proud, the fact that England has no close caste of noblesse, 
operated in practice to strengthen landlordshi]), by adding to its 
pecuniary resources and commercialising its spirit. 

The triumph of Whig principles in 1689, by placing the 
legislative and executive authority in the haijds of the squires, 
put an end in England to the policy of J^easaiit Protection. 
It is to be noticed, also, that parliamentary government was 
associated with an actual increase of the geographical area 
over which landlord forces could operate. In reading the works 
of Knapp and his school on the Liberation of the Peasants in 
the several States of Germany, wo are constantly reminded of 
the importance of the sovereign’s own Domain. It was there that 
the benevolent autocratic princes of the eighteenth century could 
most readily convert, if they so chose — and they commonly did 
choose — a population of peasant tenants into one of peasant pro- 
prietors. Thus, soon after 1776, Maria Theresa not only freed 
the serfs oq the royal manors in Bohemia and Moravia, but 
actually divided up the large demesne farms found in each manor 
into small hereditary holdings at moderate quit-rents. Frederick 
William 111. of Prussia in 1799-1805 did not go as far as this, 
but he did at any rate convert the peasant tenants into owmers. 
Even more significant, perhaps, is the present aspect of Mecklen- 
burg. That province is sharply divided to-day between, on the 
one hand, the land of noble estates wdth their day labourers, and, 
on the other, the Domanium, covered with peasant farms of all 
grades, from cottages with small hereditary plots attached up 
to small and large peasant properties. The Government could set 
about establishing a state of things like this as late as 1846 
simply because it had kept its hold on the Crown lands. But 
in England the Crown lands, which in 1660 still brought in an 
income of more than a quarter of a million pounds, produced not 
a sixth of that sum at the accession of Anne. In forty years they 




had almost all been granted away. Exactly to what extent this 
happened under the last two Stuarts, to what extent under 
William III., it is not easy to discover. The matter was bitterly 
fought over between Whigs and Tories in the reign of William 
of Orange. But it is evident that the final destruction of the 
Royal Domain took place under the first Parliamentary sove- 
reign ; and also that the Whig doctrine of the Parliamentary 
Power of the Purse necessarily involved the disappearance of the 
Domain as a substantial source of royal income. 

1 have but one more foreign lesson, but that most significant. 
Brentano has wiitten an illuminating essay on the question, “To 
what is dui^ the pre[)ondorance in Bavaria of })easant proprietor- 
shi})?“ His answer, in brief, is this: Rather more than half 
the land of the duchy belonged in the seventeenth and eighteenth 
(centuries to the church, i.e., to various ecclesiastical bodies. The 
management of th^-se estates and of the peasant holdings of which 
they were for the greater part composed — like the management, 
as Brentano remarks, of church property in Europe generally — 
was considerate but conservative : it introduced no large reforms, 
but allowed things to go on unchanged ; so that even serfdom 
{Leibeigenschaft) continued here and there to exist in name, 
tliough in the course of time it had become merely nominal. The 
main [)oint is that the peasants actually remained 6n the land, 
down to the time (1803) when the church lands were at last 
secularised and passed into the possession of the State. Only less 
important were the political result s of the retentiou by 11 le church 
of its landed }>roperty. Both for reasons of self-interest, and also 
from gratitude towards princes who championed the Catholic 
cause, the church was ready to make large grants to the sove- 
reign ; and its territorial wealth gave it the means. Rendered 
by such grants independent of their nobility, the princes of 
Bavaria were able to dispense with j)ar]iament (Landtag). There 
was no provincial parliament between 1612 and 1669, and no 
parliament at all from that date till the close of the eighteenth 
century. The gentry might wish to exact heavier services from 
their tenants or to enforce a preferential claim on the labour 
of their younger sous, but the prince was free to disregard their 
desires. And as the lay lords could not annex peasant holdings 
to their demesne farms without a larger command of labour, 
they had no alternative but to leave them as they were. Thus 
Bavaria remained a country of peasants, both on church lands 
and on noble lands, right into the nineteenth century. When 
the government finally, in 1848, took the matter in hand, 


enfranchised the peasants, and took measures to convert them 
into proprietors, there was no powerful landlord interest, as in 
Prussia, to insist upon the surrender of a large part of each 
peasant’s Holding in return for the abolition of seigneurial 
rights, and redemption was effected on extraordinarily easy 

It is hardly possible thus to learn the reasons why peasant 
ownership predominates in Bavaria without drawn'ng some pretty 
obvious conclusions for England. We know% of course, that the 
confiscation of the n)onastie estates in 1536-9, and the passage, 
by gift or easy terms of sale, of this additional fifth of the land 
of the country into the hands of lay lords and gentry, did much 
both to create the great Whig houses of the eighteenth century, 
and also to enrich those substantial gentry, like the Cronnvell 
family, wdio formed the strength of the Puritan party in the 
century previous. This, Tlallatn long ago told us, “was of no 
slight advantage to our civil constitution, strengthening and 
infusing new blood into the territorial aristocracy who wa^re to 
withstand the prerogative of the crown.” Ihit on the other side 
of the account must be set the fact that it iiicr('as('d the area of 
land subject to the influence of lay landlords, and by contri- 
buting to make the king dependant on a parliament of landed 
gentry, it put it out of his jwvei’ lo protect the peuisantry like 
liis German contemporaries. 

And now perhaps we can answ^er the tpiestion why tlui 
English land system differs from that of E^rance or G(U’inany. 
Elngland owes its present land system, with all its merits and 
demerits, to the operation on the ii])per classes of the ordinary 
motives of self-interest. These classes w^'re enlarged and 
strengthened by the growth of trade : and they were set free to 
carry out their wdll — and this, after all, was the main thing — by 
the triumph of the Beformation and the victory of Parliament. 



No. 90.—VOL. XXIII. 


It is a matter for regret that English economists have paid so 
little attention to South Wales, for the northern land boundary 
of the ].-lristol Channel comprises one of the most interesting 
industrial areas in the country. The industrial changes of the 
last half-century,* and the social consequences of such changes, 
provide an important chapter in modern economic history. South 
Wales is to-day exceedingly prosjwous, the distribution of wealth 
among the various classes of producers is less unsatisfactory than 
elsewhere, and poverty due to industrial changes is practically 
non-existent. Moreover, the configuration of the country is such 
that, except in the coal regions of North Glamorgan, industrial 
development has not yet been able to destroy the amenity of the 
towns and valleys as places of residence. 

The most obtrusive manufacturing industries are those 
engaged in the production of steel and tinplate. ])uring the past 
fifteen years the tinplate industry has been one of the most stable 
and pros]>eroLis in Great l^ritain. It depends mainly u})on foreign 
markets, and only about a quarter of the annual production is 
consumed at home. Until 1891 more than seventy per cent, of 
tlie ex])orts were shipped to the I'nited States ; but the imposition 
of a ])rotective duty under the McKinley Act led to the establish- 
ment of an American industry which, before the end of the 
century, was able to produce all the plates required for home 
consumption. A rebate of 99 jyex cent, of the import duty is 
allowed upon re-exports, and for the past dozen years “rebate 
orders*' alone have been placed in South Wales. But although 
other foreign markets have now grown numerous, and the 
relative importance of the United States has diminished, so large 
is the rebate order that Uncle Jonathan remained the largest 
customer until about two years ago. In most of the other foreign 

^ Based on a paper road before ilio Economic Section of the British Association, 

1912 . 




countries Welsh manufacturers enjoy a complete or partial 
monopoly, and the demand for the article has increased fairly 
rapidly and continuously. 

The labour conditions in the tinplate industry repay investiga- 
tion. Men, boys, women and girls are employed. The majority 
of the factories are well appointed, the wages paid are as high as 
those obtained by any group of industrial workers in the country, 
and the conditions of employment are exceptionally good. Piece- 
workers (wdio art' in a large majority) enjoy an eight-hours day ; 
the work is fairly congenial, and most of it calls for considerable 
skill. Labour is nowhere better organised than in this trade. 
Although the industry is strongly localised, and, apparently, well 
adapted to control by a single highly centralised union, the work- 
men are distributed among six associations. Since 1900 a Ccn- 
ciliation Board has been in existence, ipyon wliich, for the last 
few years, all the unions have been represented. Wage agree- 
ments are made annually, and once only has a dispute regarding 
the wage-rates resulted in a serious stoppage of wx)rk. But since 
the conciliation board was established at the beginning of a period 
of prosperity which has continued without serious interruption, 
it is difficult to say what strain it will bear. Although the 
standard rates have remained practically constant since 1874, the 
w^eekly earnings of the workmen, in consequence of im])rovement8 
in machinery and jdant, have been in many cases doubled, and 
in all cases considerably increased. 

While these and other subjects call for nltention in an 
examination of changes in economic organisation, we shall be 
mainly concerned, in this article, with tla^se cliarigos in the 
relations of the steel and tinplate industries j>roduced by recent 
importations of sheet and tinplate bars. Little, if any, written 
material is available^ for not even those journals fuibJished in the 
interests of the iron and steel trades have devoted much attention 
to the subject. In view of the unsatisfactory nature of part of 
the evidence upon which they are based, some of tlie conclusions 
here stated may require modification ; but such tests of accuracy 
as are possible have been made, and the main contentions are 
probably closer approximations to the truth than 'were the un- 
guarded utterances of controversialists during the recent discus- 
sion of fiscal policies. 

A tinplate is a thin sheet or plate of steel which has been 
coated wdth tin for the puri>ose of protecting the steel from the 
action of acids and the effect of exj)osure. From tinplates are 
manufactured petroleum cases; cans for packing fruit, vege- 


tables, and meat ; dairy utensils and boxes for holding biscuits, 
cakes, tobacco, &C. The Welsh industry was first established (in 
the eighteenth century) to provide a market for the iron produced 
in the district : it was in every way subsidiary to the iron 
industry. A tinplate mill was but an appendage to the forge, 
which manufactured other iron products as well as bars. When, 
after the middle of the nineteenth century, steel gradually dis- 
placed iron in many uses, the forge grew increasingly dependent 
upon the tinplate mill, and the manufacture of iron bar became 
a more important branch. But the two stages of manufacture — 
the production of the bar and its subserjumt manipulation — con- 
stituted practically one industry, and few “pure*’ tinplate works 
existed. The masters’ association included makers of iron as well 
as manufacturers of the finished product (generally they were the 
same peojde), and the workmen’s union was equally extensive; 
the “1874 list “ cbntrolled not only the rates ])aid to those engaged 
in tinplate manufacture, but also the wages of the men employed 
at the forge and furnace. 

Between 1879 and 1886 steel w'as substituted for iron as the', 
material of which tinplate was made— Plessemer bars took the 
jdace of j)uddl(ul iron bars, and Siemens bars that of charcoal iroji. 
The former were obtained from factories originally built for 
making rails, in which tinplate bars were only afterwards manu- 
factured as an exceedingly profitable subsidiary product. Tin- 
plate makers have never erected Bessemer plant to supply their 
needs ; for the latter requires a blast furna(*(^ and involves a much 
greater exj)cn(liture of capita] than does the plant required for 
the alternative jnoccss. Moreover, ever since the owneis of 
Bessemer works turned their attention to the manufacture of 
tinplate bars, the supply of the Bessemer quality^ has been 
siifficient to meet requirements. Since tinplate made of Siemens 
bar is inon* suitable for the majority of uses, the growth in demand 
w^as, and is, mainly for this material; consequently new 
Siemens factories were erected in the neighbourhood of tin})late 
works. Although a f(nv of these were built- by tinplate manu- 
facturers the most im])ortant were entirely separate. The sub- 
stitution of steel for iron thus liad a disintegrating effect, and 
the manufacture of tinplate became a distinct and separate 
industry from that engaged in the production of the raw material, 
steel or tinplate bar. Since Siemens and Bessemer tinplates are 

^ BeBsemcr (acid) bars are now only used for making galvanised sheets, but 
those made by the basic process are still employed in tinplate works. Bessemer 
bars for the purposes of the remainder of this article refer to those made by the 
basic process. 




partial (though not complete) substitutes, their market prices 
rise and fall together. This sympathy in prices extends to the 
bar, and anything which seriously affects the quotation for one 
influences also the market value of the other. 

A Siemens steel works consists of a number of melting 
furnaces, together with a bar-rolling mill. In the furnaces pig 
iron, scrap and shearings are melted and converted into steel. 
The molten steel is then run into moulds, and the rectangular 
blocks thus formed (known as steel ingots) are passed through 
the bar mill and rolled into sheet and tinplate bars of the required 
gauge (i.e., thickness, or weight per foot). These, when cut to 
the sizes required, are delivered lo the tinplate and sheet works, 
w^here they are employed as “raw' laaterial.” The Siemens steel 
wwks in South Wales are highly specialised. Although rails are 
made in a few’, the main (in most cases the only) product is seed 
bar. Some makers supply such l)nrs to sheet-steel and galvanised- 
sheet manufacturers in the Midlands, but they depend mainly — 
and the remainder depend wholly — upon the South Wales 
finished-steel industries for their market. A tinidatc factory 
consists of two main branches, the rolling mills and the tin 
house. In the former the bar is rolled into thin sheets, which 
are cut to the required size. In this state they are called “black- 
plate,” while the strips cut away, wdiich are returned to the 
melting furnaces in the steel works, arc called shearings. The 
blackplate is coaled with tin in the other department, and 
prepared for the market. In some tinjdatc factoi’ies sheet mills 
(similar to, though larger than, the ordinary rolling mills) have 
been added, and in these the bar is rolled into sheets which are 
useful for some purposes without further preparation. Again, 
tinplate factories are easily convertible ijito a foim suitable for 
the manufacture of galvanised sheets, and some have been 
turned to this use in rec'ent years, ddius, in Uiree closely related 
trades of the metal group three articles arc produced which, 
within very narrow’ limits, compete with each other. Moreover, 
since there is little difference between bars from which steel and 
galvanised sheets are made, and those employed in the manufac- 
ture of tinplates of common quality, all three compete for the 
imported bar. No returns appear to be given of the quantity 
used in each trade, but since the tinplate industry is much larger 
than the others in South Wales it naturally provides the largest 
market. ^ 

A tinplate factory contains several rolling mills, from eight 
to twelve being fairly representative. A steel works, on the 




other hand, contains but one bar mill ; and whether the latter is 
fully utilised depends upon the number of melting furnaces which 
feed it. A well equipped modern bar mill is capable of producing 
about 2,250 tons of bars per week, while the normal output of a 
tinplate mill in the same time is about 40 tons. One such bar 
mill caja therefore keoj) 50 tinplate mills adequately supplied with 
material. There are roughly four times as many tinplate factories 
as there are steel works. At the beginning of the present century, 
wben foreign bars were first dumped into this country, there 
existed but little real coinp(‘.tilion between South Wales steel 
producers ; each supplied a fairly secure market, and although 
there app(vared to be no price agreement, the conditions in normal 
years approximated io monopoly. 

German and American steel works, from which sheet and 
tinplate bars were sent to this country, are not so highly 
specialised. They re'semble the Bessemer factories of South 
Wales and the Siemens and Bessemer works of England and 
Scotland; and, normally, rails, girdeTs, See., form the chief pro- 
ducts. Buii by simply changing the rolls in the mills bars for 
galvanising and jilating purjioses can be made. If orders for 
(say) rails are not forthc'-oming in sufficient quantities to keep the 
mills fully employed, they arc held back for a time, and bars 
are rolled and sold abroad on a basis of prime cost. And since 
the two stages arc often under single control the prime cost alone 
of the i)ig iron need bo taken in estimating the prime cost of 
the bar. 

In 1900 th(^ monopoly hitherto enjoyed by Welsh steel manu- 
facturers was endangered, and tinplate bars were imported at 
prices which bore little nd'erence to the cost of manufacture. 
Dumping of this character has continued at intervals up to the 
present, although most of the foreign supplies during the past 
four or five years have been necessary to the progress of the 
tinplate industry. Welsh supplies generally fall short or run 
ahead of requirements; and for some time scarcity has prevailed. 
The first bars were sent over from Germany, and were of the 
Bessemer quality; but when, in 1904, German makers retired for 
a time from our market, considerable quantities of American bars 
made by the Siemens process were imported. Since the depres- 
sion of I907-'8 (winch scarcely affected the tinplate industry) 
German, American, and Belgian bars have been dumped at 
irregular intervals and in varying quantities. the first 

period of (lumping London agents of foreign producers travelled 
South Wales, and sold to the highest bidders bars which had 




already been shipped to this country on the chance of finding a 
markf t ; but as trade increased orders were accepted for future 

Imported bars have usually been sold on the Welsh market at 
prices varying from 7s. Gd. to 15^. per ton (generally about 10.9. , 
or 10 per cent, below the modal ^ price) low^er than those ruling 
for the home manufactured article, so that at first they were 
disposed of without much difficulty. But they were not so cheap, 
relatively to the home product, as they aj)i)eared to be. The 
purchase of the imported article was (and is yet) a different 
kind of transaction from the customary one on the steel market ; 
complaints w’ere therefore useless and redress was impossible. 
Moreover, supplies w^ere sent to this country without any refer- 
ence to the actual nec.ds of pros}>ective buyers. They w^ere 
generally of the standard size, and scut over in large parcels ; con- 
sequently they suited neither uinkers of odd sizes nor those who 
made a considerable number of standard sizes. For not only were 
the specifications of such makers extremely varied, but the 
separate orders were so small that they received no attention from 
the foreign producers of the raw rnalerjal. 

Again, the quality of the imjKU’ted bars was at first so poor 
and variable, and the gauges varied so much, even in small parcels, 
that they were only suitable for conversion into plates of common 
grades. They were difficult to manipulate in the mills, and 
breakages of machinery were frequent. The quality (especially of 
Siemens bars) has now improved, but even to-day some purchasers 
of tinplate stipulate that the article which is su])])lied to them 
shall be made from British steel. ^ Moreover, v hen contracts were 
made for foreign bars there w^as no guarantee of prompt delivery, 
and often duriiig busy periods tinplate makers found it extremely 
difficult to obtain bars in tulfilmcnt of such contracts. Finally, 
foreign manufacturers required a larger margin in the rolling 
weight. Since this was a much more serious disadvantage in tin- 
plate manufacture than in the making of steel and galvanised 
sheets, the imported bar w'as better suited to the latter use. But 
although damped bars were not so cheap as they appeared to be, 
nor so suitable as the home product for tinplate manufacture, they 
were undoubtedly useful, and relatively cheaper to those tinjilate 

^ By * modal ’ I do not mean either noimal or average, but rather that price 
which corresponds to the ordinate of a froquonoy curve. The phrase is 
used to imply the price characteristic of the period under consideration. 

The quality of a tinplate may be discovered by a "‘simple test, but it is im- 
possible from this to trace its origin. Consequently the merchant is forced to accept 
the word of the manufacturer. 


makers who confined their attention to standard sizes and ordinary 

The effects of dumping were far-reaching. 

(1) The monopoly hitherto enjoyed by Welsh steel manufac- 
turers was destroyed. Previously they had been able to dictate 
their own terms to their best customers, the tinjdate makers. 
Often they supplied the laltor only with those sizes which could 
be made without inconvenience, and in quantities which best 
suited iljcmselves. And Ibis |)olicy naturally proved a great 
hardship to the smaller 1 inplate manufacturers. Since they were 
compelled to purchase in quantities far in excess of their require- 
ments their credit was sevei'ely strained — more capital was 
required to carry on the trade, and interest charges were heavier. 
The sur[)lus stock, too, was slowdy oxidised through long exposure' 
in the yard, and its value reduced. Moreover, since the bar 
makers supplied those sizes convenient to themselves, the waste of 
steel in the j)roduction of jdates was c()nHi(leral)ly increased. In 
short, not only were the conditions of manufacture somewhat 
irritating, but the cost of production was higher than it need have 
been. When the monopoly was d(‘stroyed Welsh steel manufac- 
turers were cuinjadled to change their methods. They accepted 
orders for small quantities, and willingly supplied bars of the 
qualities and gauges required.^ 

(2) The second immediate result was a reduction in the prices 
of st('el bar. The nwirket for this couJinodity was often seriously 
affected l)y the underselling of German bars. It is true that the 
latter were sent over in relatively small quantities, and that the 
total excess of supply was inconsiderable. But there is no close 
and obvious arithmetic relation between the extent of over-sup]>ly 
and the amount of reduction in jirice ; a small over-6ui)ply may 
be follow'ed by a. heavy fall in prices. And this w’as true of the 
early days of dumping. 

Th(^ offer of sinall (juantities of foreign bars at low'cr prices 
often forced local steel manufacturers to reduce I he ]>rices of their 
owm bars very considerably. Nor did this prove to be so great an 
advantage to the tinjilate manufacturers as is commonly supposed. 
For the smaller firms playi J into the hands of tlie merchants. 

^ Some bar manufacturers tried to prevent the purchase of foreign bars by 
stipulating that the shearings which wore bought from tinplate makers should be of 
Welsh bars only ; others accepted shearings obtained from imported bars, but only 
at a price about 30s. a ton below that paid for shearings from Welsh bars. But it 
was obviously impossible to distinguish between the two ; careful analysis would 
only indicate quality. Moreover such analysis was not worth the cost. They were 
consequently forced to rely on the honesty of the tinplate makers. 




They were accustomed to work with as little capital as possible 
and fis much credit as they could obtain ; they relied upon imme- 
diate sales and early payment for capital to continue in o]>eration. 
When dumped tinplate bars appeared in this country the merchant 
made use of the low prices at which they w’ere sold to ‘‘bear’* 
the tinplate market, and the prices of the manufactured product 
followed those of the raw material : in other words, the merchant 
rather than t.he manufacturing class gained most by the fall in the 
prices of steel bar. 

It should not be forgotten that the small makers of tinplates 
suffered in two w-ays. I'sually they sold to merchants, and 
suffered from a fall in market [>riceH. But they did not, as a rule, 
succeed in obtaining dum})ed bar ; and they only benefited to the 
extent that foreign importations resulted in a reduction of ])riceB 
of Welsh bars. German and American bars — especially the 
latter — came over in shiploads’ or in large “,[)arcels,” and were 
generally sold to large buyers. The latter, on the other hand, 
were less dependent on the merchants. Their market was fairly 
secure, and their prices for tinplate varied less than market prices. 
Production was less a matter of speculation and more in response 
to demand directly from customers abroad and in fulfilment of 
contract. Consequently, those makers who benefited least by 
dumping apjiear often to h.ave suffered most from the resultant 
fall in prices of tinplates. 

Although prices to tinplate merchants w'ere reduc(*.d, consumers 
who purchased from them did not always, if often, benefit ; for 
just as some large consumers in foreign countries made contracts 
with manufacturers without the intervention of merchants, so, 
too, did other consumers make contracts with merchants; in 
other w^ords, while the tinj)late market is highly organised hs 
between manufacturers and merchants, it is not so higlily 
developed as betw^een merchants and consumers, and wide varia- 
tions in prices charged to consumers may exist. 

Moreover, even if prices to consumers liad been proj)ortiona1(‘ly 
reduced, the reaction on trade would have been extremely slight ; 
for the long period demand for tinplate (as distinct from market 
demand) is highly inelastic within fairly wide limits of price. 
Thus it seems absurd to argue, as many have done, that the 
prosperity of the tini>late trade in recent years is largely due to 
importations of bar at low prices. It is undoubtedly due to the 
increased use of tinned food, &c., and the effect of slight variations 

^ Not until the summer of 1911 did American shippers accept less than a 
full cargo of bars. 


in the prices of tinplates upon the prices of and demand for tinned 
goods is negligible. 

The destruction of the bar monopoly was undoubtedly an 
adyantage to tinj^late manufacturers, but an advantage purchased 
at considerable cost. Dumping occurred at irregular intervals, and 
the quantities imported varied considerably ; consequently, violent 
and unforeseen fluctuations in prices took place, market conditions 
became more unstable, and contracting for future delivery more 
difficult and risky. 

(3) XJndoubtedly the most important effect of dumping has 
been to hasten the j^rocess of integration in the steel and tinplate 
industry. Until about six years ago the two stages of manufac- 
ture formed quite distinct businesses, but, now the production of 
Siemens l)ar and tlie manufacture of tinplate constitute practically 
one industry. 

S])ace will only^ permit a short statement of the manner in 
which the change has been produced. 

In 1905 the Americans exported considerable qixantities of 
Siemens bar to this country, and Welsh ju-ices were extremely 
low. But at the end of the year dumping practically cc'-ased, and 
the market improved. A few months later the Sieiiiens Bar 
Associjition was formed for the purpose of raising and regulating 
Welsh prices ; and the conditions of manufacture and trading 
w^ere so favourable that its efl’orts ver(‘ largely successful. There 
are but few makers, and tlie number is not likely to be increased 
very considerably. For steel production involves a considerable 
expenditure of (capital; the producing ca])acity per unit is large 
relatively to the total demand, and a few factories can produce all 
the bars required. 

Ijate in 1907, however, foreign bars once more appeared on 
the Welsh Jiiarkei, and more than one local steel manufacturer 
was in a ]>osition of some difficulty. The easiest way out of this 
difficulty was to secure ])referential treatjneiit and a market for 
the bar by acujuirmg financial interests in tinidate factories. 

This policy has now been carried out everywhere, and to-day 
there are practically no Siemens bar manufacturers who are not 
also financially interested in tinplate works, and very few 
Siemens tin])late rnaktirs who are not shareholders in steel manu- 
facturing companies.* But it should be observed that this process 

1 Tho movement alill continues, but a few tinplate makers remain independent. 
They now complain that during brisk period.s they are left out in the cold and 
cannot obtain stool. Bar makers naturally supply those works in which they are 
fmanoially interested before they sell to the outside manufacturer. The importance 
of a steady supply of steel of guaranteed quality made the average tinplate maker 
ready to join the movement towards amalgamation. 




of integration would have gone on — at a slower rate, perhaps — 
even if no dumping had taken place after 1906. It was the inevit- 
able consequence of the formation of the Bar Association. For 
although the latter controlled prices, it made no attempt to control 
the output. While the steel manufacturer could not sell in the 
open market at a price below that fixed by the association, there 
was nothing to prevent him from erecting additional melting 
furnaces and in other ways increasing the producing capacity of 
the factory. And the high prices fixed by agreenuuit naturally 
induced him to do this, and to guarantee a market for the whole 
of his output by purchasing or (combining wu'th a sufficient number 
of tinplate firms. In the tinplate industry, although the pros- 
pective advantages were considerable, the (‘.onditions were not 
favourable to the control of prices by (‘ombined action. Not only 
w^ere there too many firms already in existence, but the cost of 
erecting new factories was so small tliat new comi)etitor6 could 
easily enter the trade and sell plates at lower f)rices. 3t is (W'ident, 
then, that recent dumping, by early creating a condition of things 
which would inevitably have followed, has hasieiu'd lh(^. process of 

The situation to-day ]>resents features of interest. The Bar 
Association apjiears to be a successful experiment ; prices ai*e fixed 
by agreement and cornjietition seems to have been eliminated. 
But in reality steel manufacturers are compc'tiTig against each 
other in the next stage. Ijarge firms controlling both stages wall 
often sell tinplates watbout profit, and if necessary erect neAv 
tinplate mills, in order to secure a market for the steel at 
association prices. 1.’he trade has increased so steadily during the 
past half-dozen years that this fact has escaped general notice, 
but wathin the next few years it wall probably b('-come mon'. 
evident to the outside public.^ 

* This prodictioTi, which was made when the pap*'i- was wrdljon in Sopteinbor, 1912, 
has already come tmc. In the sumiiior of la.sfc year demand waK m excess of supply 
and prices were extreincly hi^h. but at the tmio of writing tliis note (April, 1913), 
between 15 and 20 per cent, of the tinplate niiDs arc idle. Altljough the depression 
is likely to be of short duration the cau.sos aro worth mentioning, Sonio operate on 
the side of supply, the remainder on the side of demand. 

In the first place the producing capacity has been rapidly increased during the 
past two years, (1) As already hinted in the text, a large numbi r of new mills have 
been erected since the proce.^j.s ot integration bocauie well marked. This is un- 
doubtedly ttio main cause of the depresbion. (2» The efficiency of some of the now 
mills is greater than that of tiie old ones. The standard size of plate is 14." x 20". 
At first 14 inch rolls were employed, and plates wore rolled “single width " ; then 
28 inch rolls were introduced, plates wore rolled “ double width " and cut in two, 
so that the output of tlie mill was doubled with little, if any, increased expenditure 
of labour. Some of the rolls in the newest mills are 42 inches long, and plates aro 
rolled in three widths. (3) Improvements in the driving machinery have increased 


The question naturally suggests itself : how far will the move- 
ment towards monopoly or combined action go ? But a few years 
ago a well-known writer argued that a price agreement in the tin- 
plate trade was impossible, as there were too many firms in the 

tho normal output of the olclbr mills by roduciug tho number of forced stoppages. 
It is thus obvious that the ])roducing capacity has been increased more than 
proportionately to the nunibei’ of new mills erected. 

In tlic second place tho demand for tinplate has fallen, mainly because the 
Balkan War has caused tlie Kouinainan and other markets in the near oast to be 
temporarily clo.sed. But interest is now mainly directed towards the American 
markots. About two years ago the rebate orders from tho United States, and 
shortly afterwards tho Cnnadian ord(‘rs, wore lost to Welsh manufacturers. At that 
time they wore less remunerative than those which were accepted from other 
customers, and the hitter were suHieient to keep all the mills fully employed. In 
tho United States, on the other hand, both the steel and tinplate trades wore 
suffering from overproduction. Formerly the “surplus” bars were dumped into 
tills country, but recently they have been converted into tinplates for sale at home 
and ill Canada. The policy of dumping tinplates into Canada and competing for 
tiie rebate orders was encouraged by the workmen, wlio accepted large reductions in 
wages when working such ordeis. It is now reported that part of the rebate order 
for this summer has boon placed m Wales, so that it appears likely that a portion, 
at least, of the Ainenoan trade will return. 

While it is impossible to compare the costs of i)i*oduotiou in the two countries, 
it is probably true to say that the manufacture of tinplate involves a smaller net 
oxpoudituro of human energy in America than in Wales. On tho other hand, since 
the measures of value ditter materially tlic money cost is considerably higher. The 
facts already given suggest tliat American manufacturers can only compote 
successfully when prices arc abnormally high, and even tlsoii, it may bo, only when 
prime costs arc reckoned for pig iron and stool bar. 

Those considerations are relevant to a di.scussion of the probable ellocts of the 
proposed reducti«m in the United States tariff. If we cannot recapture tlie rebate 
order it is diflicult to see liow we can hope to benefit immediately from a reduced 
tariff. Until the producing capacity can bo adjusted to tho new conditions tho 
Americans will continue k) sup]»ly tinplate intended for homo consumption, even 
assuming the present high duty to be necessary to profitable business. Moreover, if 
a now and lownr scale ot dutic.s i*. adopted, of which the tinplate tariff is only one, a 
measure of value more like our own will emerge, the general level of prices will 
fall ; and if the statement that tinplate manufacture involves a smaller net 
expenditure of hninan energy is true the ultimate effect of the proposed tariff 
changes will be unfavourable to tho Welsh industry. It is undoubtedly true to say 
that if the lliiiled States iiad adopted a Free Trade policy when tho Wilson Act was 
passed, the Welsh tinplate industry W'ould not have recovered so completely 
from the blow given it by the IMcKinley Act. 

Some WTiteis attribute the present depression in South Wales to the ooal strike 
of last year. Contraisting for future delivery is uudouhtedly made more difficult by 
strikes and fear of strikes, but orders are seldom lost unless there are competing 
commodities produced outside the strike area, or a competing branch of the same 
industry in a foreign country. NeitJier of these conditions obtains in the case 
of tinplate, so that tho coal strike can scarcely bo a contributory cause of the 
depression. It is extremely likely that demand will soon be greater than over 
before, and when prosperity returns it will not be surprising to find a serious 
attempt being made to control prices by combined action on tho part of the 
manufacturer-!. 'I’he Siemens Bar Association may easily become a bar and tinplate 


trade* But to-day we find a comparatively small number of large 
busineBS units, each of them exercising partial or complete control 
over a bar mill and one, two, or more tinplate factories. Between 
these large business units keen competition j)revai]s at present, 
and keener will prevail in the future ; and without the operation 
of certain counteracting forces now at work, some such combina- 
tion as exists to-day in Germany and America would probably be 

The conclusion we arrive at is that dumping provided a strong 
incentive to the formation of the Siemens Bar Association, 
although the conditions of success of the association’s policy were 
largely independent of it. In this way it hastened the process of 
vertical integration, and helped to change the organisation of the 
two industries. The question of the control of tinplate prices, 
which quite recently was regarded as outside the range of business 
politics, has now be<*ome a practical one, and is likely to receive 
consideration in the near future. 

.1. H. JONKS 


In Iiis classic treat mont of the question of unearned incre- 
ment, Mill rightly pointed out that the present market price of 
land covers the discounted worth of future accretions to its value. 
It follows, as a corollary, that any tax upon those accretions when 
realised will also be anticipated and discounted, reducing the 
present market value. The view that the whole burden of an 
increment tax must be iqum present holders has recently received 
the endorsement of Mr. C. F. Bickerdike in this Journal,^ after 
he had dealt with the considerations leading away from that con- 
clusion. A princi])le so fundamental is worthy of close examina- 
tion in relation to ]>ractical schemes, in view of the future of this 
new branch of taxation. 

The view of tlie writer was expressed in this Journal - in the 
following terms: ‘‘Taking the term ‘market-judgment’ to be 
the reasonable consensus of opinion as to the future prospects of 
a given site, it may be said that everything as far as that market- 
judgment can see, up to its ‘ time horizon,’ as we may call it , has 
an influence on present valuers. Beyond this horizon nothing can 
be judged, all chances of further change in value are even. (If 
they are not even, let a chance of further improvement pre- 
ponderate, say as 3 to 2. Then, obviously, this preponderance 
must have an influence on present value, and the point where 3 
to 2 is still seen is not the horizon.) In a sense, we have here the 
difference between investment and speculation or gambling. If 
the market-judgment (as an averaged risk) is borne out, the 
future value is the same as the present, with a difference for 
interest only. Uie value at the horizon, discounted, is present 
value. Now a tax allowing for interest could not confiscate 
present investment value. The interest must be reckoned on the 
whole value of an unused site, but for a used site the capital value 
of the present income must be deducted from the whole value, 

'■* March, 1911. 

1 March, 1912. 




and interest reckoned on the unproductive margin only. The 10 
per cent, allowance represents about two and a half years for an 
unused site, but may be twenty years on a well-used site with 
some future prospects. The question of confiscation is jointly 
one of the distance of the horizon and the amount of the unpro- 
ductive margin.’* 

Professor Pigou,^ in his letters to The Twies, pointed out that 
an estate yielding no income, but expected to be worth £350 
per annum in 1934, or a capital sum of £11,600, would be valued 
in 1914 at £6,400, reckoning interest at 3 ]>er cent., and a tax on 
the “increment” of £5,200 is not in any sense a windfall tax, 
“but a direct impost on the present owner.” In the majority of 
cases the postulate that there is no income at all is, of course, 
incorrect — market value comprises the capital valut' of present 
income and that of future expectations. Siq^posing any fictitious 
currency increment to have boon eiiininated, Professor Pigou 
says : — 

“It is possible to separate the windfall element in the real 
increment in the following manner : If a piece of land in 191 1 has 
a total value (x + y), made up of a value a* due to its present 
(agricultural or other) use, and a value ij due to exped-ations of 
building rents after 1934, there should, ini crest being reckoned 
at 3 per cent., be a non-windfall increment in the value of the 
land by the year 1929 equal to 56 per cent, of y. If interest is 
reckoned at 4 per cent, this non-w indfall increment should anunint 
to 82 per cent. In order, therefore, that increment tax may be 
confined to windfalls, it ought only to be levied on increments 
which, at the end of fifteen years, exceed, say, 70 per (‘onl. , not 
of the total original site value, but of this total original value 
minus the part of it that w^as due to the then (agricultural or 
other) use of the land. For periods of greater or less lengi-h 
than fifteen years similar calculations could, of course, easily be 
worked out.” 

It appears, so far then, that a tax could be designed to tax 
the windfall element only, to avoid investment interest, and there- 
fore to %ftye no effect w^hatever upon present vahu^s. Ihit Mr. 
Bickerdik?^3 not in agreement. His own words must be quoted, 
in order that his meaning may not be disiortc'd. “Anyone wlio 
has paid that present value needs the increment to enable him to 
earn interest. To tax the increment simply knocks so much off 
the present value. 

“But do w'e really get out of the difficulty even if we allow 

^ Vide “The Policy of Land Taxation." 




for intereet? Do we get, in theory at least, a tax on ‘ unearned 
increment’ pure and simple? Is it not like a tax on winnings 
in a lottery, imposed after the tickets have been bought? Land 
is bought with the knowledge that its future value is problematic. 
The purchaser gives a price for the probability. If you announce 
that all the chances that turn out well will be taxed, is it not 
exactly the same thing as knocking something directly off the 
present value of all the chances? 

'*Do we not then arrive at this conclusion, that the increment 
value tax is no different, as regards the question of incidence and 
ot equity, from a simple tax on existing land values, and that it 
has this peculiar feature which differentiates it from all other 
taxes in force, excepting the old land tax, that the true incidence 
of the whole burden, present and future, is on a limited number 
of existing owners of land?^' 

Mr. Bickerdike rightly concludes that Mill, and others wdio 
have made no reference io interest, have failed to see that part of 
present value must be confiscated, and his criticism of the Pinglish 
duty is so far just, but in so far as his criticism goes beyond the 
omission of interest, and he has in mind the omission also to deal 
with the “lottery ticket,” we think his remarks require careful 
examination. Professor l^igon deals with the same |K)int much 
more cautiously when he says : — 

“In some cases an increment which is not definitely expected 
ncwertheless enters in some measure into present value, and is, 
therefore, not true windfall. I may, for instance, have a piece of 
land which is expected to yield for a long while ^300 a year, but 
in regard to which it is recognised vaguely that either a rise or a 
fall may take jdace. This land — with interest at 3 per cent. — 
will have a (-apital value of fl0,00(), and it, therefore, seems at 
first sight that the jiossibility of its rising in value is not being 
discounted. In reality, however, this possibility does enter into 
present value, acting there as a counter-weight to the possibility 
of a fall. 1’'he measure of influence which this possibility, 
reckoned over the ensuing fifteen years, exercises upon present 
value is given by the sum for which the right to all increment 
of this class — I am not, of course, now referring to the anticipated 
increment already discussed — accruing during the said fifteen 
years could be sold. The matter is one upon which the opinion 
of land-agents and others might usefully be taken. I feel some 
confidence, however, that the sum obtainable would in general be 
a very small fraction of the capital value of the land. If this 
conjecture is right, these increments, when they accrue, are 

1913] • lae tNOIDBNCa.;(jF INdiiBMENT DUTIES , 197 

predominantly, though not entirely, tyindfalls; and the passing 
of a law fbr their taxation would not strike present owners to any 
substantial extent.” 

Probably Mr. Bickerdike would not wish to insist greatly on 
the practical value of his “lottery ticket,” but since he goes so 
far, and the point is really of considerable im})ortance, it is worth 
while to examine it more closely. We fe'el somewdiat in the 
position of the Irishman who had “never seen the kettle, and if lie 
had it was lent him, and if it was lent he returned it, and if he 
returned it it was all right when he did so, and if it was broke 
when he returned it, well then it was broke when he first had it.” 
For vre doubt the real existence of the lottery ticket, but if it. 
exists it is not much good, and if it is, well it is not really a 
lottery, and no one hns read what is on the ticket. 

In what sense is the value of land jnoblematie, and in what 
sense does the purchaser give a price for the pr(fl)ability? Taking, 
for simplicity, a site that yields no {)reseni inconui, we may 
conceive that it will be worth .i'‘2,t)()() at the ex])iration of a certain 
length of time, and therefore 1‘1 ,50U Jiow, the present value, 
because : — 

{a) It will certamly bo worth that, on capitalised income 
yield, and the prosi>ect8 of plus or minus are nil, or 

(b) it may range between .1:1, 900 and l'‘J,100 at that lime 
on income yield (we assume for the moment that what Pro- 
fessor Pigou calls the “counterweight” is equal to the prospect 
of deficiency, and that value is midicaij between the extrejnes, 
though this is not necessarily tru(i), or 

(c) it may range between :i'l,5no and I'i2,o00 (on income 

Now, on Mr. Bickerdike’s principle, (a) would be covered by 
the interest allowance, and there is no depression of present price' ; 
(b) has a practical range (on tlie assumption of a 20 peu’ cc'iit. 
tax, above interest allow^ance) from £1,900 to £2,080, mean 
£1,990, present value £1,497 10.<?. ; (c) has a range £1,500 to 
£2,400, mean £1,950, present value £1,402 10,9. Thus, the 
effect on present value is proportioned directly to the pure 
gambling element, and, inversely, as the stable business element, 
in the valuation, and if it has some effect on present values in a 
f^w cases it is not wholly to be deplored. ^ 

gambling results, there would be little r(‘asoU''^Ti equity, why it 
should not apply to transactions already entered upon. But in 
land it is only a small proportion that are of the extreme gambling 
type, and we may get an unbroken series up to the other extreme 

No. 00.~VOJi. XXTTT. 1 ? 


xy^iere the purely commercial unspeculative result rules, and there 
is absolutely no lottery element. Only a small proportion of 
cases are of the highly fluctuating or lottery kind, and also only 
a small proportion of dealers in proj^erty care anything at all for 
the lottery element, and give anything for it. It may be said 
that one ]:>erson who does, out of a dozen bidders, will command 
the sale ; bul^ we would venture to say that even that one is often 
absent, and it is not those who esteem the lottery ticket who 
generally nil(‘ the pric(‘.s. 

Then, again, there is the mistaken assumption that the 
relation between lottery iicket values and lottery prizes is a simple 
mathoHalical one, and that a ticket is “worth the prize divided 
by the chances to the average person. The relation is far n:ore of 
a psychological character. Is it to be understood that one grand 
prize of £1 ,000 for a thousand tickets would give the same ticket- 
value as five hundred £2 prizes? Indeed, no; and the i)oint of 
maximum appeal to the gambling interest is probably between 
these two, but generally it may be said that a little docked off 
the big jH’ize would not affect the value nearly as much as a 
reduction of the number of chances. So a tax that “docks” 
something from the prizes will not have such serious results as 
one which procetuls to take the whole of every fifth prize away. 
The “demand ” side is little influenced by the exact size of prizes, 
but greatly by Ihe chances. Our assumed interest-free increment 
duty th(m will not have an exact mat hematically-equi valent effect 
on values, especially wdien the j)rize is discounted over a long 
period and we are thinking only of present values. 

But it may be said that w'c have assumed that the lottery 
elemcmt is ju-esent during the currency of the accumulating 
interest period, whereas it should be taken as coming into exist- 
ence afler tlu; realisation of this. That is, w^e should take the 
value to Be £2,000 at maturity (£1,500 now), plus a lottery ticket 
to be given us then for what will happen in the more distant 
future. We have, as (a) above, what represents a certainty (as a 
market judgment) plus a problematical after-possibility. This 
chance element may be (1) either a narrow or wide range of 
fluctuation in value, say down to £1,000 (decrement), up to 
£3,000 (further increment), as given in (6) and (c) above, or (2) 
one chance, in a number, of a good prize. Dealing first with (2), 
the above remarks apply with greater force owing to the distance 
of time. We get a position, in most cases (in evaluating the 
present value of a lottery ticket to be awarded at some distant 
period, of wiiich the prize will be payable at a period still more, 


distant) analogous to the value of a reversion which, lying beyond 
a nnmuer of years having a reasonable relation to the span of 
human life, fails to have any effect upon present values. 

But in the case of (1), which may be said to be the typical 
one, and is probably what Mr. Bickerdike has in mind, where 
problematical future values have to be dealt with, we must say 
more. In this case, we can see our way to a certain definite 
result with reasonable certainty, but after that there w’^ill be a 
fluctuation up or do^vn. ^rhe uj) and down are in ecpiipoise; a 
tax on the ‘‘up,** and no allowance for the “dowm,” will make 
the point of equijxuse lower, and thus affect piesent value — such 
is substantially ibe argumejil. But a cnicia* (|uc.sti('u has beeji 
omitted. Is the system a personal one, dealing only with the 
position of the owmer ; oris it impersonal, dealing with the site? 
The English system is the latter. On an impersonal system, 
dealing with the site only, when the site has risen to i*2,()()() as 
expected (and if interest is alUwed, no leal chargeable increment 
is found), it is fnmhed for ever for 'fc‘2,()00. What is the signi- 
ficance of this? If it sinks in income value thereafter to, say, 
^1,700, a purchaser knows that it is trankod at £‘2, ()()(), and he 
has a JU300 rise absolutely free of tax possibl(3. So this site, in 
competition with other sites of equal income values, which have 
never been so franked up to an advanced point beyond thc^ 
existing income value, has a substantial advantage. With the 
lair postulate that taking the generations through, and ignoring 
decadal fluctuation, sites will have a tendency to increase, this 
site will be bought with a subsequent advance and recovery 
actually in view’, and the question of a tax-free increment acting 
as a differential advantage will pi^vent the value falling to the 
point it would have reached hut for the tax already borne. ^ If 
other sites, having no such advaiitage as the “shield” provided 
by the over-sangume estimate previously ])laced by the market- 
judgment upon the site in question, would have been worth d[:l,70() 
in the abWmce of a tax, and if we assume that the existence of the 
tax dejiresses their value below that figuie, the shielded site does 
not share the disability at this point, 'llie fluctuation range wdll 
not then be altered from, say, f2,30()-iJl,700 to i£2,250- 
5£1,G50 by the existence of a tax, but to €2,250~il,700, i.«., 
£1,975, or half the amount of the tax below the old mean. In 
short, the equipoise is reduced by half the tax, because, althougli 

Analogous to the effect of the Laud Tax exemptions and abatements on market 
values. Vide “Land Valuation and Rating Reform," by the present writer, 
Economic Joubnal, 1911 . 

P 2 




aTjy, further increment will be taxable arid reduce the prize, if 
there is a decrement, tax will be held up as paid in advance for a 
subaequenl recovery, and Ihe fact of freedom for this tax will be 
uiscounted in the decrenumt. If we revert to the lottery figure, 
it may be said that \\hile each holder is to be given, on the 
declaration of the result, a ticket in a subsequent lottery, those 
tickets given to tlie failures sliall ho favoured by carrying the" 
right to prizes of the old magnitude, whereas the tickets given 
to the successful continue to bear title only .to taxed prizes.^ 

But it is one thing to have lialved the maximum burden which 
is to b(' foreseen oi* (lis(‘oimted, and another to consider the whole 
practical effect of the reduction. It is one thing to observe free 
action in a vacuum, but another to modify it by the introduction 
of normal conditions. In tlic catallactic S2)here we have con- 
sidered, the change in size doubtless does not affect the probability 
of shifting in the slightest, but in real life we know tliat the 
smaller the tax the less tendency it has to shift, and if resistances 
are constant the probability of shifting will irierease ^U'Ogressively 
with the burd(‘n. At the 2 ^oint of emergence into practical possi- 
bility, a change directly as the square seems a not improbable 
assumption. It is not too much to say that in halving the burden 
— distant and not too tangilde in this ease — the j^robability is so 
diminished that the net resultant burden shiftable in the aggre- 
gate of the cases is reduced to one quarter. But this is viewing 
the tax as of an ordinary kind, prospectively considered. When 
we remember that it is merely an alteration in lottery values, 
and that its aj^peal is not along actuarial but psychological lines, 
and along those lines is in the direction of minimum effects, the 
actual [U'obabilit} ol shifting back is still further reduced. Home 
of the considerations urged l)y Professor Pigou in relation to 

1 While it may not he primd facie x>laubiblo that the lower limit can be actually 
improved i)y Uio imposition of such a tax (i.e., that it may ho above {£1,700 in the 
example tak(3n), it is conceivable Uiat such may be the case if the conditions urged 
by some writers as likely to ensue upon the introduction of the tax are actually 
found to exist. They contend that ownership will be perpetuated, and owners will 
prefer to remain in possession and receive the income, rather than become, by 
capital realisation of that income, subject to the burden. The contention is dealt 
with later, but in so far as it may be correct, it is an interesting speculation to 
consider t)ic effect in a limited market with few buyers and sellers. The owners of 
“unshielded” sites, worth 1*1, '<00, would not wintt;, to sell, unless the price rose 
enough to reimburse them, and there would hi*, tor them, a zone of reluctance, say, 
to {£1,760. A single “ shielded” site, in its downward search for a buyer, need not 
drop to £1,700, but only to just within this zone, to be carried off, Hutch auction 
fashion, say at £1,740, by the most urgent bidder. The owner having no cause to 
share the reluctance of the others, can, in short, profit by it. In such an event, of 
course, the point of oquipoiso after the imposition of the tax is closer than ever to 
th^ original figure. 


postponed” texation m general are also m point here, and to 
the ^ame end.^ 

Here we may profitably con&idei the eftect of such a device 
as the “substituted she value the British system, where a 
purchase figuie within the tx^enty veais prioi to 1909 which is 
higher than the 1909 valuations may be substituted as the datum 
line. What is the position when tv^o sites of equal value (say 
£1,000 at 1909) are in competition in the maiket, one of uhich 
cost, say, £2,000 fifteen yeais ago, uhile the olhei had no such 
history? If both rise in value to £1,500, the seJlc'i of tlie fust 
gets his £500 “profit” m full, wheieas the othei vmH secMiie, aftei 
payment of the tax, only £120 The first, if buyers ue few, can 
afford to sell at £1,470 and still do a great deal bettei than tlie 
second at £1,500 The piovision acts as a handicap in fa\ou) 
of holders of the former and ma\ ha\e a teii(hn(\ to lowci the 

On the whole it may be said that, “c\en in theon,” Mi 
Ihckeidike s doctnne of unncisal incidence on piesont owneis 
needs such seveie qualification as to destio} its \alu( as .i \ali(l 
ciiticisrn of an inic lest-aliowing inciemcnt tax proposal Vnd 
m practice, too, it has \ei\ little somblaiue ol liutli Tlic' 
statement that the true incidence, pusenl and intuu of a icsil 
windfall tax is on a iiimted uumbei of existing owueis of land, 
thioiigh the lotteiy pimciple, is siiiulai in dc'giee, it not in kind 

' Wealth and Welfare, p 376 

* The Fmauoe (1909 10) Act, 1910, pioAidos [su 3 (0)1 foi a 10 pci cont increa « 
m site value to bo tax free on each occasion wbon llie inriuiunt ^aluG i being 
calculated, with the slight reservation that ni iiij hvt \raTs the amount so allowed 
fehall not exceed 25 per cent of tin sit© \alut Soc 2(1) confines taxation to the 
incicmont in site \alue bee 1 en mm rates tlie occasions ol taxation to me hide 
bale, lease over fourteen ytais, am death See 2(3)pu)Mdcs foi a substitution (for 
the '‘original value of 1009) of an} greatei sum paid during the pieoeding twenty 
years, to avoid taxation in the case of a recover} from depicsRion since that purchase, 
and see 3 (1), etc , for taxation to bo confined to progicssnc increases and not to 
apply to recoveries from intervening decicnicuts 

The German Imperial Incioment Tax Law of Lobiuai}, 1913, pi o\ ides m soc 1 
for taxation of increment m the value of proport} , m stc 7 foi “death’ to 

be excluded fiom the occasions for mcriment in soc 1(> for certain allowances of 
interest upon the purchase puce, from 1 poi cent to 2^ pu cent aciordmg to 
circumstances Sec 17 makes the tax retrospective on incrcmentj from the value 
rn 1886, or from any higher purchase price Sec 28 establishes the tsx graduation 
from 10 per cent on increment not cxoccdirg 10 per ci nt , up to 80 per cent on an 
increment of 290 per cent , this tax being reducible b} 1 per rent of its amount (not j 
rate) for every year of the increment peiiod, thus treating shoitpcuod speculative 
rises most heavily These points suffice for the puiposcs of tlm aiticlo — a further 
detailed comparison of the two complex systems is given by tlie writer m the Local 
Government Beview^ December, 1912, 

202 the economic JOUBNAL [JUNE 

to the statement that a crooked nose three generations hence 
exists to-day in the great-grandmaternal ovum. 

Professor Davenport, and other American writers, abuse the 
‘Xapitalisation or “ Amortisation ” doctrine by applying it too 
sweepingly. ‘‘With every increasing assurance that the new tax 
program will be adopted there must concurrently be taking place 
a fall in the market values of the lands. When, finally, the law 
has been enacted, the values of lands wdll have fallen in a degree 
to express the present worth of the expected future increases in 
the tax burden.* **^ When Professor Davenport, speaking actually 
of the Elnglish tax, goes on : “Such lands as are thereafter sold 
will exhibit in their sale prices this prospective diminution of 
income,^' there seems to bo some confusion in the language. 
“The real taxpayer is, therefore, the present vendor. If the 
new proprietors are ever called upon to feel any burden, it must 
be solely by the fact that they have mistakenly appraised the 
degree of menace. “ Professor Johnson - says also that : “It is 
true that the burden of the tax will fall on the present owners ; 
. . . the decline in selling value will he the sum of the present 
values of all the future increment taxes, so far as they arc 
anticipated,^^ We italicise his last woids, because they govern the 
whole question. E^ortunately, the writer goes on, “the sum of 
an infinite series may itself be <(uite small. Moreover, the fact 
that land owners and land buyers may not expect to appropriate 
all the increase in value is no reason why they will not appropriate 
all the law allows, l^nghty per cent, of a loaf is better than no 
bread. “ These statements about the immediate incidence of all 
future burdens are extravagant indeed when we remember that 
the majority of land values comprise, in the greater jiart, 
capitalised present income, with perhaps a small margin for real 
expectation (and occasionally a little payment for a lottery 
element), so that a 10 })er cent, tillowance is more than enough 
to prevent the throwing back of the tax on this marginal element 
in most cases, leaving the genuine windfall element to bear its 
own tax when it arises. 

But Professor Davenport’s remarks about the effect of the 
burden in inducing owners to retain ownership and receive rents, 
instead of selling and paying a tax, are very much to the point.® 
He urges that the effect will be to Ifcsen transfers, and the tax 
will therefore tend to fall more and more upon occasions for duty 

* Quarterly Journal of Econmnics^ Vol, xxiv., p. 289. Ibid.y p. 761. 

» Since the tax is levied only on sale, grant of long lease, or on death, in England, 
wliile in Ghjrmany “ death" is omitted from the occasions for liability, 


at death. Thus the periods of accrual will become longer, and 
occasions fewer/* ^ But under the British system, with the 10 
per cent, allowance every time, and still more under the German, 
with the progressive rates, there is a strong countervailing ten- 
dency that most writers omit to notice.^ If “occasions** tend to 
be few the Revenue will be the gainer. Again, too, there is 
always a demand for outright purchase, and if owners hold up 
so that properties “trickle** out into the market, prices will 
harden up, and even valuations at death will have a tendency to 
be based on the evidence of the higher and fewer sale prices, 
which at once set up a counter attraction to sell. As Professor 
Johnson has said, Professor Davenport’s theory — “that the per- 
petuity of the landed gentry has been guaranteed ** — needs severe 
qualification. Brunhuber rightly says that an increment tax 
“stands in the way of any artificial rise in values, “ and “a 
substantial and rapidly progressive tax of this, sort tends to keep 
down prices.**^ It has been argued, with some show of reason, 
that a periodic levy, say every ten years (in a direct form), would 
avoid the question of special retention. 

Mr. J. A. Hobson’s comment upon this “shifting-back** 
question is disappointing. He holds that the fact of having invest- 
ment in land having proceeded on an equality with other forms of 
investment for so long need not preclude the special taxation of 
future increments, “for if it be contended that part or the tchole of 
such future rises of value has already been anticipated, . . . and 
that it would be unjust to take from existing owners any part of 
the prospective values, . . . w^e can only reply tliat this cannot 
be held to be a proper interpretation of the conditions under which 
reasonable men have recently made contracts for the sale or 
annual leasing of land.*’^ He explains that it is not “j>roper,’* 
because the proposal to raise public revenue from increments in 
land value has figured so prominently in practical politics of all 
progressive parties, that it may “fairly be presumed that the 
probability of such special taxation has been taken into account 
in recent negotiations for sale or leasing. ... If I h?iyc paid 
£900 when I should have paid £1 ,000 but for the probabifity that 
special taxation would shortly be placed upon it, I can 'have no 

' Vide “ Unearned Increment Taxation in Britain and Germany — a Comparison,*’ 
—in the Local Government Review, December, 1912. 

2 Vide ** Ueber die Reform der Grundsteuern in Grossbritannien und Irland,*’ 
in Conrad^s JahrhUcher fur Naiionalokonoinie und Statistik, July, 1912, by the 
present writer. 

3 Quarterly Journal of Economics, Vol, xx., p. 103. 

* The Industrial System, p. 226, 

204 THE ECOKO«lj^ JOUBNAL [jvm 

groUBid for cdiiiplaint if this probability is converted into 
aotnality.” He disposes of the shifting-back difiiculty by shifting 
it back further ! You have only to talk about a tax for a time 
before it is imposed to deprive it of all sting when it comes into 
force! And if there is any injustice, it is not the doers and 
legislators, but the talkers and propagandists who work it. Mr. 
Hobson does not deal with any allowance for interest as a method 
of reducing the difficulty, so that the full force of a tax on the 
British method has to be covered by his “talk about it and 
smother it up” doctrine of incidence, and at the General Election 
of 1906 the burden of the tax of 1909-10 on future increment was 
borne once and for all I Throughout this paper we are not really 
concerned with the effects of apprehension uix)n market values, 
which should not b(‘ confused with the mathematical disposal of 
a known burden, but only with the possibility in theory ** and 
practice of shifting hack a tax u|X)n true increment or windfall. 

We have assumed up to this i>oint that an adequate allowance 
for interest is being made, and that otherwise the incidence of 
the tax must be f)artly on ))resont values. But this question of 
interest as a pro])er and fair allowaiu^e must not be dismissed too 
lightly. Like every other feature of an increment tax, il must 
be studied in relation to the otJur clcnirnts of existing taxation, 

“The proposition to exempt a (vTtain kSiuh for interest brings 
in at once important features, nearly alvays overlooked. The 
very sum exemjded is an accumulated interest which will thus 
have borne no tax at all, income or otherwis'=^, and real property 
is virtually the only form of cajntal (not dependent upon the 
collector’s instinct) lu Mhich a man can let his interest accumu- 
late without bearing tax thereon annually. ... A man who had 
bought a [)roi)erty for -CLOOG, and sold it for ^1,500, has hitherto 
escaped income tax, because it was a “capital” increase; now 
when it is said : “You have a capital increase suitable for taxa- 
tion,” if he j)Ieads that it is not cajutal, but merely interest 
(deferred), he is back into the arms of the income tax. The 
problem of scheming a tax on future social values without affect- 
ing ar??/ present values a1 all (as distinct from existing CQjitracts) is 
well-nigh insoluble, because there must be brought in a kind of 
substitute for an income tax on an interest previously free, and 
that can hardly be done without affecting the present capital 
value of tlu* somce yielding that interest.”^ This objection to 
the interest allowance has never been answ^ered. Of course, 

1 Vtdc Economic Jouhnai., March, 1911, ** Land Valuation and Rating Reform 
by the prebent writer, 



directly we cease to tax or rate a property on its present income 
value (and, in the ease of a vacant site, that is nil), and begin 
to tax on a percentage of the capital value, the objection fails. 
This class of accumulated interest has too long been free from 
all taxation, and if it is now reached by a non-interest increment 
system, there can be no real hardship except possibly in the rate, 
4^. in the £ instead of Is. ^2d. income tax. But even then, the 
escape from rates, so far as they are levied on a faculty prin- 
ciple, serves to show that the new taxation on this class of income 
is not excessive. Any burden falling upon the present owners 
through this system should not be put to the credit of a true 
increment tax, but must be regarded as due to the rectification 
of an anomaly in the income-tax system, and as jnst similar to 
what would have taken fdaco had this favour(‘d form of j)roj[)(‘rty 
been brought within the income-tax net by legislation. 

8o we reach the conclusion that an incriMiieni duly on the 
British model comprises Um) el(‘nients : one, a legitimate exten-'* 
sion of the incom(‘ tax to a class of annual interest hitherto free, 
and the other a true tax upon “windtalls.” ^Phe first, in so far 
as it is not covered by the 10 per ceni . alloirancc (and sucIj cases 
will be mainly restricted to unused sites), is sliilt('d baek, as the 
rectification of a diflerentuil fcuour, to prc'seni holders; and tlie 
second, the true inclement tax. is hardlv “shiftable ” at all. 

J. (\ Stamp 



Digression on Professor Pigou’s Theories. 

Resuming niy attempt to construct an abstract theory of 
railway economics, I find the ground j>reoccupied. My incipient 
constructions are dojuinated by a new and imposing edifice which 
has arisen in their neighbourhood. The builder thereof is one 
who lays his foundations very deep ; and it may well happen that 
in doing so he may have caused the ground io give w^ay from 
under a neighbouring structure. It is possible also that his 
building may afford sup[X)rt to that of a neighbour after the 
manner of a buttress. These fears and hopes are excited by the 
cliapters on monopoly and railway rates in Professor Pigou’s 
Wealth and W cl fare. I have already^ pointed out the importance 
of this work as n. whole. I think it necessary now to consider in 
greater detail those parts of the work which bear on subjects 
handled in the preceding sections of the present study and in the 
earlier paper ® on which those sections are partly based. I follow 
an order of topics suggested by the arrangement of th('. said 

Limits of State Intervention . — There occurs first the question, 
What are the limits of a study wdiich purports to lead by v>^ay of 
the theory of monopoly value up to the regulation of railways 
by Government.^ ] had defined the objects of the study as “public 
works characterised by monopoly of such a kind as to justify the 
intervention of the State.” What that kind might be I suggested 
by reference to M. Colson, who distinguishes those works> which 
have need of land in so special a degree as to call for the inter- 

1 See Economkj Journal for September and December, 1911, and June, 1912. 

^ Economic Journal, Vol. xiii., p. 62. 

® “Applications of Probabilities to Economics,’’ Economic Journal, June and 
September, 1910. 

* According to the plan proposed at the outset of this study, Economic Journal, 
V61, xxi., pp, 346-9, 


ventioB of Gdverumeat.^ On considering Professor Pigou’s 
theories, cited below, I am disposed to attach less importance, in 
pure theory at least, than I did to the limitation of land. Still, 
I should not venture to describe as erroneous or imaginary a 
distinction sanctioned by high authorities.^ 

Graphical Representation of Cost . — Under my first heading I 
sought to appreciate the importance in railway economics of that 
much-talked-of attribute “increasing returns.” The relations 
between cost of production and quantity produced j)resent such a 
variety of aspects as almost to defy the subtlety of speech, even 
when rendered precise by mathematical conceptions. Similar 
shapes designated by the same name, a supply-curve, are often 
employed in a misleading manner with reference to quite different 
circumstances. For instance, it may make all the difference 
whether we are considering (a) long periods, or (o) sl)ort ones; 
(b) the presence, or ($) the absence, of what^ Dr. Marshall calls 
“external economies” (c) collective cost, or ( 7 ) that which 
pertains to a single individual (or constituent grou])) ; id) the 
rdgime of competition, or (5) that of mon('poly ; (c) the remunera- 
tion of the entrepreneur as included in the cost of production, or 
(e) as a residue distinguished from the entrepreneur’s expenditure. 
There is a less mistakeable division between (z) the use of one 
of the co-ordinates to represent price, the construction w^hich Dr. 
Marshall has made familiar, and (^) the use of one co-ordinate i.o 
represent the total amount of money demanded in exchange for 
the amount of product represented by the other co-ordinate.® 
There is a certain correlation between (corres])onding members of) 
several of these dichotomies ; and it is therefore the less sur- 
prising that throughout Professor Pigou should have adopted the 
positive and I the negative attribute. The supply-curves which 
he employs are mostly of the type obcdez ; while mine arc 
primarily of the typea^ 78 €f. 11 is not to be expected, therefore, 
that there should be a close similarity between our representa- 
tions. But I am concerned to show that there is no essential 

For the purpose of instituting a comparison 1 construct in 
Fig. 1 a supply-curve of the ty]:>e above distinguished as z ; and 

1 See Colson, Cours S Economic PoK%we; (deuxi6mG edition), liv. i., p. 148, 
liv. iv., p. 200, and liv. vi. passim, 

2 Op. Pigou, op, city pp. 246-7. 

* The f system is used by Mr. Flux in the Economic Journal, Vol. xv., and 
commented on by the present writer. Vol. xvii. It is not quite identical with, being 
less general than, Dr. Marshall’s curves of International Trade referred to in the 
Economic Journal, Vol. xv., p. 69 and Vol. xviii, p. 541 et jteq. 


T trpilsfer here a curve of the type | which I have employed in 
my Section 1.' 

For the present purpose it is not necessary to consider the 
simplest and most elementary transactions to which such curves 
may pertain : such tiiinsactions as international trade between 
two imaginary islands, or the bargain between ideal hunters of 
tw'o different tyjw's — say white emj>l<)yers and black employees — 

In Pig. 1 SSo is a paraliola of whicli the eijuation is 


y-i' = j ydx - J {a-,r 4 ax'^ -i Jx *‘) ; y=JI (a- + nd. + ^x^) . 

The unit in wliicb x is measured is a (=one inch). Accordingly MQ=2‘25 inches ; 

inch. The demand-curve passes through D at the vortical distance 
ot 2 inches irom 0, and intersects t\ie supx^ly-ourve at P. BD^ is a right lino 
ol which the slope relatively to the vertical is 2/5^. Accordingly the slope of the 
curve of marginal supply prices is Hvice tViat slope. BB^ intersects 88^ at T ; 
nearer the origin than P as might be expected, the law of diminishing returns 

as to tlie disiribiition of their joint quarry. ^ The curves of type e 
proper to such conceptions are not considered here. Let us rather 
suppose as riqiresenting, ajireeably to common usage, the 
amount j* of, say, agricultural produce offered by a set of farmers 
using implements, employing workmen, and l)aying I'enl. If the 
ihcrease of produce did not involve any sensible (additional) 

» See p. 352, Vol. xxi., Fig. 1. 

• Compare Qmrterly /cnmia I of Econo^mes on the “Theory of Distribution/’ 
1904 , 

X913] , tomuiBV^jom iKEOBY of batbs ^9 

fH^ssuro on;.tbe ifeo0 this s«pfily-<^rv6" would he. ‘Siip{)ose, a borir 
i:ontal line* Btiit suppose that there is such a pressure; and ie^t 
it first he of such a kind as merely to necessitate deej 3 er ploughing 
and digging on the part of each cultivator, without otherwise 
modifying the conditions of cultivation — in short, without 
negative' ‘‘external economies.” The collective supply-curve 
fiSi would then be obtained by sim})ly adding u]) the amounts of 
f)roduct offered by each individual farmer at any assigned price. 
The “general ” expenses consisting, suppose, entirely of rent, 
would be represented by the area SNP : while prime costs are 
represented by OSPM. 

Kig. 2. 

Here it may be well to remind the reader that there is some- 
thing arbitrary or dependent on unessential circumstances in the 
distinction between “prime and “general ” ns we have used the 
terms. Suppose that labourers could be changed only after long 
notice, and that labour and machinery were readjusted less fre- 
quently than the amount of land variable in small parcels with 
imaginary facility ; on such a supposition the rent might be 
regarded as prime cost, the other expenses as general. The same 
ordinate MP might now represent the price of that increment of 
land which corresponds to an increment of produce. More 
generally it is proper to regard the price PM as made up of two 
(in general, more) portions, MK and KP, c(OTespondmg respec- 
tively to the values (at the prevailing pric*of the factors of 


production) of that increment of capital and that increment of 
' land which the entrepreneur would take on if free to distribute an 
assigned increment of resources between the two uses.^ Even 
where this freedom does not exist in reality, one factor of produc- 
tion as compared with the other varying per saltum, there is some 
theoretical advantage with a view to the problems which are 
before us in realising that the price of the product is theoretically 
not affected by the circumstance that the agents of production are 
or are not varied continuously. 

Professor Pigou improves the familiar construction of the 
supply-curve by the addition of a new curve, that of “marginal 
supply prices,” SS2 in our Fig. 1 . This curve is thus related to 
SSi. If the ordinate at any )X)int of the abscissa, M, intersects 
SSy at P and SS2 at (), the area OMQS is equal to the area 
OMPiV.^ But the area OMPN represents the total expenses 
incident to the prciduction of the quantity OM ; inclusive of rent 
(the area PSN) and of entrepreneur’s remuneration, which by our 
convention is included in the area OS PM, Accordingly, the line 
MQ — or, more exactly, the little rectangle of which that line is 
the height and a (small) unit of produce is the base — represents 
the addition to the total cost incident to the production of an 
additional unit. 

But, it will be asked, is not this the very definition of 
“marginal cost”? And have w'e not just seen that — however we 
manipulate the distinction betw^een prime and general cost — the 
marginal cost incident to an increment of produce is OP? How 
then can that incremental cost be OQ? The answer is that both 
statements are true. The same predicate “marginal increment of 
cost” is truly coupled both with MP and with MQ ; if in the one 
pfepositioii it is understood simpHciter , in the other proposition 
as the logicians say, secundum quid. For MP is the increment 
of cost consequent on an increment of production, the cost of 
production of the units of commodity other than this increment 
being supposed constant. That is, MP is the marginal cost from 
the point of view of the entrepreneur producing a small part of 
the aggregate output in a rdgime of competition. But MQ is 
the increment of cost consequent on an increment of pmduction, 

^ See Pareto, Cours d'Economie Politique^ § 718 (referring to § 100 - 1) ; and 
compare Marshall’s analysis of the “ supply price of a knife as the sum of the supply 
prices of its blade and handle.”-— Principles of Economics^ Book V., Ch. VI., § 1 ; 
and his note on marginal product (with reference to J. A. Hobson’s theories), 
op, cit,, p. 393, ed. 6. 

5* In symbols, if y is the ordinate of SS^ Y that of SS.^^ 



the price of the produced commodity not being supposed con- 
stant.^ Kalheri account being taken of the circumstance that the 
price is such that if a sale could be effected at that price the 
expenses of production would just be covered, that covering price 
changes (in the case supposed, increases) with the amount pro- 
duced. Accordingly, MQ might be described as the marginal 
increment of cost from the point of view of a monopolist. 

In this connection mention may be made of another piece of 
mechanism due to Ih’ofessor Pigou : the curve of ** marginal 
demand prices.” ^ '^i^he relation of this curve to the ordinary 
demand-curve may be shown as follows : Let DDi be the deniaiul- 
curve in our figure intersecting (be sn]>ply-curve at P; the 
curve of marginal demand prices. If the ordinate, not drawn on 
the figure, at any point on the abscissa, J, intersects DDi at iJ, 
and DD2 at Dg, the area OJDiD is equal to tlie area of the ro'd- 
angle of w^hich the base is OJ and Hie height But the area 

OJ DiD represents the total utility, or, in Professor Pareto’s less 
equivocal phrase, “ophelimity” accruing to ilie ensiomers from 
the quantity of commodity OJ (on llie supposition of their obtain- 
ing it gratis). The corresponding money value is that wlncli would 
be realised by a monopolist wTio practised discrimination of tlu^ 
kind defined by Professor Pigou as ideal’' — a conception w^hich 
he has happily illustrated by the suggestion of a method wdu'reby 
a monopolist of this particularly grasjnng ly[)e might conceivably 
touch the total value in question, Accordingly, a monopolist of 
this type w-ould push production up to, but not beyond, the point 
at which the increment to the said total value is just equal to the 
increment of total cost, that is, the point at which the curves Dlh 
and SSo intersect, the point T in the figure, or the point^T^ on 
the abscissa corresponding thereto. A nobler use of the two new’ 
curves will presently appear. 

* Let X {-OM) be the produce, p{ = MP) the supply-prico, or cost of production 
pec unit, xp {r:OMPN=OMQS) the total cost. Thou MP {p being 

treated as constant) (the complete dilfcrential)=^ + a:~|^. 

2 See Economic Journal, Vol. x., “Producers’ and Consumers’ Surplus.” 

3 In symbols (corresponding to those used above with reference to supply) let 
y' be the ordinate of DD^ T that of DDa* Then 


In the figure, DD-^ is intended to be a straight line inclined to the axis of E at 
an angle with tangent 1. Accordingly DD^ is inclined to the vertical at an angle with 
twice that tangent. 

■* Economic Journal, Voh xiv., p. 391; Wealth and We^are^ p. 203. See also, 
with reference to this kind of monopoly, Economic Journal, Vol. xx., p. 453, 

212 . THB economic ,TOE|lNAIi [jt^KE 

The moderately mathematieal reader will have no difficulty in 
^translating these constructions into the form which I have 
employed, above labelled 1. The curve Si in Fig. 1 might be 
supposed to correspond to the curve PQR in Fig. 2, if we do not 
attend to the initial convex part of the latter curve, rather suppose 
it to start from 0 and be convex (to OZ) throughbut. The 
abscissa OZ in Fig. 2 corres|)onding to OX in Fig. 1, the ordinate 
in Fig. 2 a per}>endicular let fall from R on OZ — not 

drawn in the figure) would correspond to the area OMPS in 
Fig. 1. What line Ihen in Fig. 2 corresi>ond8 to the area OMQS 
in Fig. ] ? It might be the ordinate of a certain curve derived 
from OPQH in Fig. 2 which I have indicated as pertaining to 
the rdgime of competition,^ the collective supply-curve (Gesammt- 
angebotscurve) of Auspitz and Lieben.^ Or rather, as we are 
not here explicitly representing the jirofits ol the entrepreneur 
as varying with the amount of product, it is proper to take our 
curve PQR as the cost-curve {Gesammtkostencurve) with the 
interpretation (not that of Auspitz and Lieben) tliat the inter- 
section of any right line drawn through the origin with that curve 
designates the amount ofliered at the price represented by the 
inclination of the line.^ With this interpretation the vertical 
distance defined liy Auspitz and Lieben^ as the measure of Collec- 
tive Utility iOeme\}inutzcn) corresponds to the area DTS in our 
Figure 1. 

I have given another construction in which the factors of 
])roduction — in the case before us “capital” ( = labour -f imple- 
ments -f waiting) and land — appear as co-ordinates. S|y the 
amount of tlie former factor is measured along the bottom of the 
page from the h'ft corner, while the other factor is measured 
from the same jioint along the left side of the page. The cost k 
of any two quantities of the factors (at prices supposed to be given) 
is measured downwards on an ordinate perpendicular to the 
j)lane of the paper. ^Phe corresjxinding amount of produce multi- 
plied by its price (which the monopolist is free to vary), say ^ 
less l)y the cost k, gives z, the quantity which it is the object 
of the monopolist to maximise. The con^ruction is such that z 

1 Defined by mo, Economic Jouhnal, Vol. xxi., p. 358, and inoie fully by AuBpiisi 
and Liebon in their Theoric des Preises, p. 13, 

“ The construction ( thus interpreted will I think correspond to that which 
Mr. Plux has employed in his paper on “Improvements and Rentability” (Economic 
Journal, V^ol. xv) ; it being observed that he takes cost for the abscissa and product 
for the ordinate, as in our Figure 1 B of Section 2 (Economic Journal, Vol. xx., 
p. 35). 

* Op. cit, p. 370. 

^ See Economic Journal, Vol. xi., p. 365. 


is measured upwards from the plaue of the paper. In seeking this 
maximum the monopolist entrepreneur will describe a path on 
the plane of xy ; which will be a broken sort of path in case one 
of the factors, such as land, comparatively with the other is varied 
per saltum. This construction is applicable to a regime of com- 
petition with a little modification. We may suppose different 
entrepreneurs to move by different paths in seeking each the 
maximum of the z pertaining to him. The height of ihe. average 
z may be regarded as snuill or null : rather in deference to fact than 
as required 1)5^ theory.^ Each entrejneneur ever strives to make 
his z as great as possi])le. So each golfer in every match strives 
to make the difference between his score and “bogey** augmented 
by his handicap, as small as possibk' ; though on an average, in 
well regulated golf links, probably the difference l)etween the 
score and (bogey 4- handicap) is ztTo, or rather — having regard to 
very bad players — on tlie wrong sid(' of zt‘ro. ’ 

8o far we have sii]>[)(^sed the curve of marginal sup])ly prices to 
be ascending. Now let u.s consider a deseimding curve of the sort 
such as SB in Fig. 3 (see p. 2M). If we retain the supposition 
that the collective su])ply-curve is formed by sim[>l(*. addition from 
the dispositions of the individual enti;:^‘f)renonrs, thi‘ sn]^}>ly-carve 
SS' derived from SB (a(‘-cordiiig to the rule above given) will be 
insignificant in a regnuc of compidilion. For it rejUTsents only 
that amount of jn’odiiction which at any assigned pricii a (fords to 
entrepreneurs a minimum of |)rofit — a position of unstable equili- 
brium. But in a reginiv of monopoly it might well ha])pen in 
the case represented tliat ]>rodu(*li()n might b(‘ stable at any point 
between 0 and 0'.- 

Jn order that the deseending sn])[)ly-cnrve may he significant 
in a regime of com})ctition it must receive a difhu’ent interjireta- 
tion. The height MP now denotes as Ixd'ore the firice at which 
the quantity OM is e\oked^ in a state of industry a-dapted to 
that scale of production. Ihit what coiaesponds to the curve SSj 
of Fig. 1 in our first example, considered as representing the sum 
of the amounts offena] by each enlrejireneur at any (one) 
assigned price, is a quilt‘ different curve from SSi of Fig. 3, 
an ascending curve, the “short -period** supply-curve. It 
is here represented by a rightr line — in tlie luaghbourhood at least 

^ On the theoretical point, see Scientia, Vol. vii. {1910), p. 92, and referonceH 
there given. As to the factw almost all that is knf)wn J believe is well presented 
by Ashley in the Economic Journal, Vol. xx., p. 350. 

2 As noticed (with referonoo to the curve there employed) EcONOii^jc Journal, 
Vol. xxi., p. 3C1. 

3 Defined more exactly by Professor Pigou, Economic Journal, Vol. x,, p. 358. 

No. 90. — VOL. xxiit. Q 




In Fig. M the cnne of marginal supply prices SBS'S^ is a parabola with vertical 
axi^ end apse at />'. 11 AJ)~-b 0.1—20, OS~-2a‘^-* h; the equation of the curve 
referred to () us cngm i'. 

F -6 4 ^{jc - 2 a )^. 

Prom this tlu‘ expression for // the ordinate of tlie snpply-curve is obtained by 

t(i- j ' Yih' = 6.1 f l.L'^ - + 2a ‘-'.-r'. 

Whence y-h-\ 2a-- ox -I- 
S' betvM'cn the two ciinfs 

There is a minimum of y at the point of intersection 
This ju'opertv is general ; since 

and accord ingly ^\hen F-//, —Q. Jn order to construct a simple system of 

‘ ' cl r 

Oiori peiiod supply cun os, loiiricd by right lines with a positive slope of 45“ (Cp. 
Ph oNOMio JoviiNAJ., Vol \v,, p. 68), put 

//EE.r 1 ; 

where i 2a" oj i x. Then for the equation to any line of the family, 

wc ha\c 


where j' is the nhscissa of any point on the curve SS'Si. For instance, when 
y-a{- ()M), \p(y)~bi-l^a- a; and accordingly the equation of the corresponding 
line is 

- a; 

the equation of a line passing through P, the broken line in Fig. 3. In the figure 
the unit a is taken as three-quarters of an inch, and 6 is taken to be half an inch. 
Accordingly, OS { — IVQ')^2 inches. The demand-curve is a right starting 
from the point 1) wliich is at tlie height 2*5 above the origin. This demand-curve 
intersects the suijply-curvo at P of which the height is inches. The slope of DD^ 
with reference to the vci’tical is Accordingly that of DD^ is The intersection 
of DD^ witlf/S/Sg (not shown m the figure) is at a greater horizontal distance than P 
from the origin ; as might be expected, the law of increasing returns acting. 


of any, point P on the snpply-cnrve, for it may be Biipi[x>soil lower 
down to twist and cut the axis OY near 0. The construction is 
explained in my review of Mr. Cunynghcme’s Geovietrical 
Political Economy in the Economic Jodbnal for 1905 (pp. 66-68). 
For the sake of convenience I virtually made the assumption 
which Professor Pigou has made on perhaps other grounds, that 
*‘the price at which anybody supplies a giyen quantity of coift- 
modity is made uj) b}' the addition of two parts, one depending 
on the quantity that the person hinjself supplies, and the other 
upon tjie quantity that the whole market collectively supplies.” ^ 
The ascending part of the supply-curve SSi is similarly to be 
interpreted, and not as the curve SS^^ in Fig. 1. 

As in the case represented by Fig. 1 we may here uerive from 
the demand-curve DDi the curve of rnargiual demand prices DD^. 
As there, the intersection of Dlh with determines <he 

maximum of Producers’ + Consumers’ Hnr})lus,.not subject to the 
condition that prices are assigned by competition. Jt might be 
described as the aim of a monopolist, but now a monopolist of a 
very peculiar kind, a monarch of enlighteiKHl benevolence who, 
surveying the vast plexus of transactions throughout the com- 
munity, would wish the terms to he altered in such wise as to 
increase (the money-measure of) the aggregate of satisfactions. 
This maximum of satisfaction thus aimed at transcends that which 
is attained by laifisez-faire, the H- V of Dr. Marshall’s deep 
mathematical note xiv. The latter might be compared to the 
state of health and efficiency resulting from the piactice of 
what is natural and habitual in diet and therapeutics. An arbi- 
trary departure from that practice, based on a mere association 
of ideas, like the inediawal shniJia si}nilibus, may he compared 
to crude Protectionism, as likely to do harm. But we are not 
thereby forbidden to depart from vhat is called natural, in a 
direction pointed out by science. One of the directions in which 
it may jnove possible to imjirove on laisscz-fairr is afforded by 
Professor Pigou’s doctrine' supplementing that of Dr. Marshall 
with respect to the “limitatkins of the abstract doctrine of 
maximum satisfaction.”- The new and less abstract maximum, 

- F', as we may call it, transcends tlio state of unrestricted 
competition of which it is sometimes said by mathematical 
hedonists, and implied by practical free traders, that “this regime 

^ Pigou, Kconumic Journal, Vol. xiii., p. 21 ; the roferenoc to “ demand ” there 
made being omitted to suit my context. 

2 Prmciples of ICconomics^ Book V., Ch. xiii., p. 4C7 et seq,; referred to by 
Professor Pigou in tlie Economic Journal, VoI. xi., p. 3CG. 

Q 2 




realises the maximum of satisfaction and the minimum of sacrifice 
for each of the co-exchangists.” ' To advance some way in the 
direction of H' - V' may be beiter than to have attained if - F ; ^ 
just as you are higher when half-w^ay up Mont Blanc than on the 
top of Snowdon. 

Increasing Heiurns.—l cannot claim to have anticipated this 
strblime use of the new curves.'^ Jt is relevant here as bearing on 
a question whicli I have particularly considered, the signification 
of the term “increasing returns.” Tn view of much tedious dis- 
cussion in recent literature I sought to fix the meaning of that 
evasive term. I distinguished as “primary” and “secondary” 
two definitions respectively importing that an added dose of 
productive power increases (1) the marginal, or (2) the average 
produce. Among other considerations in favour of the primary 
definition, I remarked : “When we contemplate the working of a 
competitive as bearing on the interest of the community, 

from the ixiint of view of the jihilosophic statesman, then we 
’svelcome the jhenomenon of Increasing Ileturn (or deprecate its 
contrary) as lending to (or from) some (piantity which it is pro- 
]K)sed to maximise. But the criterion of such a maximum is 
analogous to our prhnary conception.” ^ Now the point of view of 
this philosojhic statesman is exactly that of the benevolent 
monarch whom we have just imagined — except that the view of 
the latter is assisted by tlu'. new implement which has just been 
described. Accordingly, 1 clahn Professor Pigou’s authority for 
my priinarij definition. ))e sure, the denotation is generally 
the same for the two connotations ; hut not alw^ays, as we may 
see in Fig. 3, where the tract (of produce) AO' presents decreasing 
returns according to the first definition, but increasing according 

^ I quote from TTisioirr. den doctrines Economiques (p. G36, ed. 2) of Gide and Rist, 
who are transcribing faithfully enough the doctrines of the mathematical 

- Compare Pigou, Wealth and Welfare, p. lOG. 

3 The system of co-ordinates here called ( (above, p. 207) may bo adapted as 
I have indicated (Economic Jouhnal, Vol. xi., p. 359) to the system of long-period 
supply curve with intersecting short-period curves, proper to increasing returns in a 
competitive rajime. The area DTS in Figs. 1 and 3 would then correspond to 
a lino in a modified form of Fig. 2, the greatest vertical distance between two curves 
which are modifications of Auspitz and Liehen’s Collective Cost and Collective Utility 
Curves ; the distance measuring the total utility called by them Oemeinnutzen ; {oj), 
cit . , p. 370). But neither they, I think, nor I proposed to employ this conception 
for the purpose of contemplating the ideally best distribution of resources; for 
instance, that as between two classes of industries of the types pertaining to our Fig. 1 
and Fig. 3 (Diminishing and Increasing Returns) it would be theoretically advan- 
tageous to diminish the output determined by laissez-faire in the former case and to 
increase it in the latter. 

* Economic Joubnal, Vol. xi., p. 359. 


to the second. My interpretation is confirmed by Professor 
Pigou's use of terms in the important passage, too long to quote 
in full, in Wealth and Welfare,^ which resumes *‘the general 
analysis of distribution developed by Dr. Marshall.” The 
of diminishing returns to individual factors of production,” it is 
there said, ” states that the increment of product due to the 
increase by a unit of any factor of production in any industrial 
field will in general be smaller, other things remaining the same, 
the greater is the supply of that factor already employed there.” 
If I mistake not, a typical instance of this doctrine is afforded by 
our introductory lemma ; when the land being considered as coii- 
aiant the “capital” laid out thereon is increased. As shown by 
the rise of the curve SSi (considered as a sliort-periotl supply- 
curve) in Fig. 1, the increment of ])rodiict due to the incivase by 
a unit of “capital ” will be smaller (in tlie neighbourhood at least 
of the point of equilibrium) tlie greater lh(' supply of that factor 
already employed. Assuredly, the law of diminishing I’eturns 
which such a factor fulfils is diminishing returns in the primary 
sense. Professor l^igoii evidcuitly treats (hai as the sense of the 
term when he does not even notice (hat in tlu' same circumstances 
increasing returns in the secondary sense niiifii prevail— 'initially. 
Yet the term “increasing returns” is largely employed in such 
a case by the leading American writers on railway and 
general economics. One whom 1 shall often quote as not 
only the latest but also one of the greatest of tliem, thus ex- 
presses himself : “The law originates [irimarily in the fixeid condi- 
tions attaching to the heavy capital investment — the fac( , namely, 
that fixed charges up to a given point of saturation tend to remain 
constant absolutely : but become ju’oporfionately less as the 
volume of business ex[)ands. From this fact, therefore, rather 
than because of any marked 'economies of largc'-scale |>roduction, 
may it be affirmed that railroads oH'er a notable example of the 
law of increasing returns.”^ It is in virtue of this fact that “a 
railroad theoretically presents a clear (‘xamj)le of an indiKsiry 
subject to the law of ibereasing returns.” 

Joint Cost . — In the case of another imj[X)rfant term, Joint 
Supply (and its synonyms), 1 am disposed to a(‘-cept Jh*ofesBor 
Pigou’s ’'usage for the primary definition, while admitting as 
secondary the definitions sanctioned by the authority of railway 
experts. In the first section of this study 1 have given a general 
definition covering the cases included by the American writers ; 

1 Part II., Ch. II., § 3. - W. Z. Kiploy, Ttailroads (1913), p. 99. 

^ Op. cit, p. 71 etseq. Cp. Economic Joubnal, Vol. xi., p. 370, last par. 


but I place in a special category the cases excluded by Professor 
figou; for instance, where the Joint Cost depends upon a 
quantity such as total weight or volume which is the sum of two 
or more items each pertaining to one of the joint products.” ^ My 
typical examf)lc, clover and honey, fulfils, I think, Professor 
Pigou’s definition that “two products arc supfdied jointly when a 
unit of investment exjicnded upon increasing the normal output 
of one necessarily increases that of the other also.”^ This is not 
evident at first sight ; for, of course, apiculture without clover 
seed would not result in an output of clover. Professor 
Taussig makes a vejy natural criticism when referring to 
Ih'oi'essor Pigon’s example of joint cost, back loading, he 
remarks: “Now in back loading, as in other cases where 
‘ discriminating ’ jates are made, it cannot be said that a railroad 
‘ ncccssarihj ’ (1 follow Professor Pigou’s example in italicising 
the word) puts on the market a supply of one kind of service when 
it sii])plies another kind. There are always some separable ex- 
penses : For example, in the case of back loading there are the 
terminal expense's and the extra cost of hauling a loaxled train 
over that of an empty onc.”^ Ninety-nine out of a hundred 
critics would probably endorse this criticism. And they would be 
justified in so far as ninety-nine out of a hundred writers might 
be supposed to use the phrase “increasing the normal output” 
as meaning no more than “increasing Die output.” But it is 
not to be sup])osed that the disciple and successor of Dr. ?Iarshall 
employs the term “normal” as a merely decorative e2)ithet. 
Professor Pigou has, 1 think, all along very pro})er1y used 
“output” as the output of something that is demanded, and has 
implied that the demand is not of an excej)tional, perfectly 
inelastic, character. Tt follows that the output necessarily tends 
to be, and we may therefore say normally is, increased by the 
diminution of its marginal cost. Now a diminution in the marginal 
cost of producing a commodity such as the trail s][K)rtation of a 
back load is caused when new trains are put on — not merely to 
meet a temporary emergency, but as a |ierfnanent arrangemeut — 
to meet an increased dirccl traffic. But the marginal cost of an 
article transported by a returning “empty’’ is not similarly 
increased by another item in the back load. "These statements 
are not affected by the existence of “terminal expenses ” and the 

^ Economic Jocrnal, Vol. xi., p. 560. Cjuiparo the representation of Joint 
at p. 460 of Vol. x. 

^ Wealth and Welfare , p. 215. 

" Quarterly Jourml of Economics, Vol. xxvii. p. 380. 


It were to be wished;' perhaps, that Professor Pigou had 
ejjipressed himself in terms less liable to misconstruction. But, in 
fact, it would not be easy to give a more unequivocal definition 
without making it either very long or very technical. For an 
explicit description which, I think, nearly covers the instances 
contemplated by Professor Pigou I again quote Professor 
Eipley ; — 

“Bailroad expenditures, as Taussig clearly pointed out a number 
of years ago, ajfford a prime illustration of the production of several 
commodities by a single great plant simultaneously at joint and 
indistinguishable cost. The classical economists illustrated this law 
by the joint production of wool and mutton and of gas and coke. 
In both of these instances neither commodity could conceivably be 
produced alone. . . . The law of joint cost with r^forenco to the 
production of transportation is somewhat different. Compare, for 
instance, the can*iage by a railroad of thousands of passengers and 
different commodities in every direction, under varying com^itions, 
singly or wholesale, slowly or hv express, over* a given set of rails 
every day; with the operation of a great refinery, producing simul- 
taneously kerosene, gasolene lubricating oils, and greases, as well 
as various odd chemicals. Both are examples of production at joint 
coat, but with various important contrasts. In the refinery all the 
costs are joint. All the processes are interlocked. Eveiy iiicn^ase 
in the output of kerosene produces pari passu an increase of the 
other commodities. On the railroad not all, but only a ))art of tbo 
costs are joint, in such manner as 1ms been shown. For, from tlic 
joint portion of its plant — roadway rails and locouiotives — the railroad 
may produce transportation of different sorts quite independently. 
It may choose to especially cultivate its passenger traffic or cotton or 
coal business. ^ 

The “important contrasts” so clearly exhibited by Professor 
Eipley would not be materially affected if the increase of other 
commodities pari passu” vrith kerosene required some special 
or separable expense ; just as the output of copperas as a joint 
product with wire, which Professor Pigou by implication in- 
stances as a genuine case of joint supply, requires some special 
cost for the erection of necessary sheds. 

A short but technical definition may be based on the form of 
the (mathematical) function which expresses the relation between 
assigned quantities of several comn^odities, Xy y, w, Vy Wy (Src., 
and Zy the cost of producing the whole set. Materials for the 
construction of such a definition may be found on a former page.® 
There may be some doubt as to wliere the line should be drawn 
which separates the prim.ary from the secondary definition of 
Joint Cost. But there can be no doubt that it should be drawij 

^ Op. city p. 67. 2 Wealth and Welfare y p. 220, note 1. 

^ EroNOJiic JouxiSAL, Vol xi , p. 500 


well aboT^e the case in which the total cost z is related to the 
quantities of the products simply as a function of their sum : that 
is, in the manner below indicated by a quotation from Professor 
Pigou. I apply the term “sum” to the addition of adjusted units 
(like those below supposed for jvease and beans), ordinary (, 
avoirdupois) units each niulii])lied by a proper coefhcient corre- 
sponding to s])ecial t^osls.^ 'J'he ground of the distinction lies 
herein, I think, that in the case of joint cost proj>er we cannot, and 
in other cases W(‘ can (theoretically), predict the relative charges 
for different coniinoditi(‘.s without icgard to tljc demand for other 

'' Cost of Service Principle. — lint the question what is the 
proper or })rimary definition of th(‘ term doint Cost is itself of 
secondary inter(‘st. Professor J^igou will perhaps alknv the Ameri- 
cans to have their tenniiu)logy if tlu^y will concenle to him his 
projjositions. The .main issue, of far df‘eper importance than the 
definition of a word, is whether Professor Pigou is right in con- 
cluding that, in the* regulation of railways, discrimination or the 
“value of service” principle should, after an initial — probably 
brief— stage, give place to the “cost of service” principle.^ 

First appearances, it must he admitted, are against ITofessor 
Pigou, Psing t('rms in a stiange sens(', and accusing distin- 
guished economists of common fallacic's, he j)ropounds a thesis 
contradicting tlie doctrine of the higliest authorities on railway 

1 The hoarin" of Joint. Co^t proper on the power of predicting conipetitivo price 
may bo ilhi.'iti'ated by siipposnig that normal oqui librium, after having boon roacbed, 
is disturbed by a change in doinaud tor each ol two ooinn.odities ; and observing the 
effect according as Joint Cost pnq^'r is absent ('r present Jjot tho cost, 2 , ^F{T), 
whore (1) T=:ay -\ by -{-cu ! . , ar.d a ?/, u .. aro assigned quantitjos of the eominodi- 
tioft designated A", Y, V . . Tlo'n lim respective prices, in cturipotilive equilibrium, of 
tho commodities A", Y, U aro F’[T)a, F’{T)h, F\T)c,... Now let a change in the 
demand for X and Y occur, 'rhou in general lliore will he a change in volume 
affecting cost. “Cost is unknown until volume is ascertained,'’ as Professor Bipley 
well says (loc. cit.). Put in tlic case before us the ollEcot on price may well be small, 
if there aro many coinmoditms ; the now sob of prices boing F\Ta At)af F'{T 
At any rate Uic relative prices, the ratios in which the total charge is distributed among 
tho different commodities, arc unchanged. (Compare ]\rarshall, Principles of 
Economiesy Mathematical Note, xvii., i)ar. 1). Nc'st(2) let T~ ax-\~2hji'y-\-by 
Now when ,r and y are “ interlocked,” to borrow a phra^^e irom Professor Bipley, the 
prices are no longer as independent of the quantities as before. The new price of X is 
now F\T-i AT)[{a \-2h{y f A?/)] and the now price of Y is F'iT-i- AT}[a-^2h{x-C Ax)]. 
It is evident that the prediction of tho prices from tho costs is not such a simple 
affair as before. Once more <^3) lot T~ajr-\ 67/-+..., or more generally T=(l>{x) + 
The disturbed price of each commodity will now involve, in a more 
disturbing manner than in case (1), the quantity of that commodity. ' But it will 
not do BO in the same way as m (2). It is a nice question whether this case should 
be described as Joint Cost im>per. 

. ^ Wealth and Welfare, p. 234, and context. 


economics. What though in power of mathematical reasoning he 
wields a bow which few can bend ! Does he not aim with it at 
the clouds? An airship, indeed, would seem to be just the object 
which he has in view. For his refined reasonings would be 
admittedly sound if all transportation was effected by flying- 
machines. For then presumably each flying-machine might be 
worked to the full for one kind of traffic only. The case would in 
this respect resemble that of those railways for which discirimina- 
tion is not claimed, where “each has in the main its own expenses 
of operation as well as its own road-bed and other plant.” ^ But, 
as it is, “the freight service of a railway comprises the carriage 
of all kinds of goods simultaneously from the most valuable high- 
priced commodities, such as silk and satins, down to lumber, 
coal, cement, and even sand.”‘^ The attribute of limitation in 
the suf>ply of land, rejected by Frol'essor Figoii,^ seems now to 
I'ise up against him. For it is ])art]y on account of this limitation 
that a plurality of railways each worked to the full for one kind of 
traffic is unthinkable. 

Such are the first appearances. But on reflection, in the light 
of the principles which have been above recalled, it >vill be 
discerned that if the flying-machines are perfectly competitive, no 
essential difference is introduced by their having mixed loads ; 
supposing, with Professor Pigou, that “a unit of investment is 
responsible either for x units of one kind and y units of the other, 
or for (x + h) units of the first kind and no units of the second, 
or for no units of the first kind and (//-f-A) units of the second.”* 
Thus, in our introductory lemma/' suppose that the produce in 
wdieat is destined for ditferent kinds of cakes and bread. The 
price of a unit of wheat for difTcnmt destinations would still be 
the same. And if the same ground is equally suitable for pease 
and beans — joint effects in the wuj of rotation of ci-o])s being 
abstracted — then if the prime costs Hn the sense explained) 
of (properly assigned) units of pease and beans are the same, the 
same wall be the selling price for pease and beans of units (so 
assigned). The orthodox economist stating this familiar doctrine 
would not be put off' by the affirmation that a great part of the 
cost was indeterminate, being joint for all the products in large 
part ; that it is impossible to allocate the amount proper to each 
product. This objection might be made to Professor Wiener’s 

^ Taussig, Quarterly Journal of EconomieSy Vol. xxvii., p. 379 ; and cp. 
p. 380. 

“ Hipjfw, op. cit.y p. 169. 

Wealth and Welfare^ p. 218. 

Above, p. 207. 
Above, p. 208 el se(i. 




doctrine of “imputation”*/ or to the pretension, censured by 
Mill, of assigning, in a philosophical sense, the amount due to 
each of two concurrent causes — like the blades of a pair of 
scisecrs. But this indeterminateness is quite consistent with the 
determination of value in exchange — proporiioned to marginal 
cost — in a regime of j^erfect competition. But the prices so deter- 
joined, according to the received theory, afford a maximum of 
advantage to ])roducers and consumers. A similar maximum of 
advantage must be ascribed to the charges for mixed loads 
which would be ado])ted by airships conceived as sufficiently 
luuueroiis to realise perfect competition. Railways, indeed, cannot 
be conceived so numerous as to bring about that scale of charges 
through llie play of competition ; but it is to be believed that maxi- 
mum advantHge would be attained if there could be imposed 
by authority in this case that proportion of charge to marginal 
cost which is know^n in other cases to have that desirable result. 

I must confess to have countenanced an erroneous view in this 
matter. Concerned mainly with monopoly, I intjidentally mis- 
stated a law^ of competition. 1 argued that in general a single 
undiscriminated price might be replaced by two (or more) dis- 
criminated prices with advantage both to the (monopolist) 
producer and the customer. For any value of monopolistic revenue 
or any value of customer's benefit assigned at random the 
maximum of advantage to the other party will be realised not by 
a unique price, but by discrimination. But I omitted to notice 
lhat the case in w'hich tlie initial unique price (or the assigned 
amount of advantage to one fjarty) is that which occurs in a 
regime of perfect competition is a particular limiting case of wliich 
the statement generally probable is knowm not to be true. The 
general reasoning breaks down when we suppose the initial 
(unique) price of t^vo commodities to be equal to the (equal) 
marginal cost of eaoh.“ In this case if any neighbouring system 

1 Referred to by Marshall, Principles of Economics ^ p. 39a (od. vi.), and unfavour- 
ably reviewed by the present writer in the lilooNOMic Joubnal, Vol. iv., p. 281. 

“ It was shown in a previous paper (Economic Jottunal, Vol. xx., p. 446 et seq.) 
that if h is the undiscriminated monopoly price of two articles (or spooies oi the 
same article), 6(1 t iji)6 (1 -f- r;^) are any two discriminating prices in the neighbourhood 
of h ; then the curve representing that the Customers’ Surplus (considered as a function 
of and %) is constant (the same as what it was when and m eaoh=:0) and the 
(likewise interpreted) curve of Constant Producers’ Surplus intersect^ in such wise 
that it is in general possible to adopt a system of discriminating prices which will be 
better both for the producer and the customer than the undiscriminated price 6. It 
is supposed (in the absence of joint cost) that the cost of production is the sum of 
two costs each a function of (the amount of) one of the products {loc, cit., p. 460) ; 
or more generally a function of the sum (or oi a linear function) of the quantities 
produced (above, p. 220). The psoposition remains true in general when by b 


of discriininating prices be assumed, it will be the interest of one 
or both parties to return to the unique price. 

I subscribe, then, to Professor Pigou's thesis ; but with two 
considerable reservations, pointed out by Professor Pigou 

Firstly, if a railway cannot be made to pay with rates and fares 
assigned on the principle of cost of service, it is better that it 
should iDractise discrimination than that it should not exist. More 
generally, let it be supposed possible to operate the raihvays of a 
country so that the marginal cost of each ton-mile is the same. 
Then the maximum of the type II -V is attained. But it may be 
better to pursue the ty[)e H' - V' by employing discrimination so 
as to increase the output of transi)ort for which the demand is 
very extensible, and where the advantages of increasing returns 
are thereby secured. It might be one of the exceptions to the 
general rule that there should be equality, of “marginal net 
products” in order to secure maximiun satislaction.^ No doubt 
the conditions. are a priori improbable.- But there is si)ecific evi- 
dence of high authority for tneir existence ; so far as we may thus 
interpret the dicta of the experts, such as “Much of this business 
is made ix)ssil)le only by sjx)cial rates aclapled to the case in hand. 
A higher rate . . . would kill the business.” “To compel each of 
these classes of goods [silk and satin, . . . cement , and even sand] 
to bear its proportionate share of the cost of carriage would at once 
preclude the possibility of transporting low-priced goods at all.”'*^ 
The testimony of high authorities would, no doubt, carry even 
greater weight if it should be repeated with a full recognition of 
the a priori improbability to which Professor Pigou has called 

Secondly, let it be granted that tl)e cost of seivice princijde, 
the system of charges which would be realised by perfect competi- 
tion, is ideally the best. Yet with regard to a system so complex, 
how can w^e ascertain in the absence of competition w’hat charges 
would be fixed by competition? The attempts to do so for railway 

we understaud not only the monopoly price, but any unique price for the two 
articles. But in the 'particular case when the marginal cost of producing the 
amounts saleable at the unique price h is just equal to h the proposition breaks 
down ; the curves do not intersect, but tcnich at the point (t 7 i =0 > 7 a = 0), in such wise 
that it is not possible to move off from that point in a direction advantageous 
tu both parties. It should be observed that the existence of a maximum at this 
point is not inconsistent with the possibility that some other point represents 
greater advantage both to producer and customers, as suggested in the text (p. 215). 

^ Cp. Wealth and Welfare^ p. 107. - Op. cif., p. 211 et aeq, 

3 Ripley, Railroads^ pp. 162, 168 et passim. The dynamic use of discrimination 
claimed by Professor Ripley would, I think, be admitted by Professor Pigou 
as pertaining to an initial stage {op. cit,, p. 234). 


rates have often proved ludicrous. They remind one of the pre- 
tension sometimes made by politicians to tell us what some dead 
chief — Mr. Gladstone or Lord Beaconsfield — would have thought 
about a measure which was never before them. The defunct 
authority ought at most to be invoked only to sanction a general 
line of policy, uot to famish details such as, say, the items of a 
tarifl’. iVs Professor Pigou says: is plain that anything in 

the nature of exact imitation of simple competition is almost im- 
possible to attain.’’ ... “A considerable gap between the ideal 
and the actual is likely to remain.” ^ 

The im])raci.icabilily of the cost of service princi])le seems to 
be largely the gnmnd on which it is dethroned by leading 
economists from the sovereignty which it might otherwise claim. 
Professor Ripley b(‘gins : “There can be no question that for an 
indispeiisabl(‘ public sc'rvice like transportation, conducted under 
monoi)olisti(*. conditions, the ideal system of charges would be to 
ascertain the cost of c'ach service rendered and to allow a reason- 
able margin of proht over and above this amount.”^ But he goes 
on, in view of the difficulty of ascertaining those charges, to 
attribute a position of collateral supremacy to the principle of 
value of service : “Two general tlunries governing the rates 
chargeable by railways are entertained, known respectively as 
cost of service and value of service. . . . M either of these views 
[pertaining to the two theories] is entindy sound by itself. Both 
have large elements of truth in them. Each qualifies the other ” ^ 
“Our final conclusion then must be this: That both principles 
are of equal iniportance, and tliat both must be continually invoked 
as a check upon each (dher.”'* 

These dicta no doubt embody the highest ])ractieal wisdom. 
And it is perhaps vain to desiderate that tlie limits of these prac- 
tical principles should be defined more closely by reference to the 
more general conditions of welfare, the “e(]ualiiy of marginal net 
products,” or the still more ideal princi()le that the money measure 
of economic salisfactions should be as great as possible. 

Theory of Liniitcd Monopoly . — Nor do I attempt here to 
formulate Ibe relation between the cost of service principle and 
the mixed modes of monopoly which are discussed in my second 
section. Suffice it lo submit that in the present state of scientific 
opinion about the subject those discussions seem not otiose. In 
this part of the work 1 have obtained sup})ort from the adjacency 
of Professor Pigou’s constructions at two points. First, he lends 

^ cU. , p. 265 fit seq. 
Op. cit.] pp. 166, 167. 

- Op. cit., p. 168. 
* Op. cit., p. 184. 


countenance to the use of a right line for the demand'-curve as a 
device for exploring the probabilities of more concrete cases; 
though he himself seems to use the construction chiefly for the 
sake of convenience.^ I am fortified in the assumption that the 
right line may be provisionally taken as the type of the demand- 
curve pertaining to the customers of a railway company.^ I am 
therefore confirmed in the deduction that discrimination accom- 
panied with a moderate control is likely to be better, both for the 
customers and the monopolist, than monopoly forbidden to 

In this and other theories 1 have largely employed a sort of 
Probability which has been described in this journal as a priori* 
and elsewhere perhaps more unequivocally as “unverified.** This 
species of probable inference bears to the more solid parts of 
statistics and economics a relation something like that which 
Adam Smith has pointed out between literary and rnathematicial 
compositions. The authors of the lailei kind, he says, “may 
have the most perfect assurance both of the trutli and imix)rtance 
of their discoveries; and accordingly they are, much more than 
the others, “indifl'erent about the reception which they may meet 
from the public.” ^ Now the unverified or non-statistical part of 
Probabilities, though it is but common sense reduced to formula, 
yet is not so commonly recognised, not so obviously objective, 
but that those who employ it should desiderate the approbation 
of good authorities. This sort of confirmation is largely affordiul 
by Professor Pigou, who employs this sort of inference repeatedly 
and with respect to the most momentous interests.^ 

The problem in my second section, which comes nearest to 

1 Once at least to show that as there is nothbig knowable in this simple case, 
“ our ignorance would not be lightened ” by abandoning the assumption of linearity 
(p. 107). ; 

But the claim which I have made in favour of the right line that it is inter- 
mediate between the convexity predicated by Dupuit and the concavity predicated 
by Professor Pigou (Economic Journal, Vol, xxiii., p. G5) must be retraefced. It 
was based on a misinterpretation of Professor Pigou’s doctrine concerning the third 
differential of utility {Industrial Peace, p. 70). I forgot that the theorem related 
not to a particular commodity, such as railway service, but to money income, being 
in fact an improved version of what I bad myself (Economic Journal, Vol. vii., 
p. 659) described as ‘ ' the cirenmstauee that as the income is increased by equal 
increments the differences between the successive increments of utility become loss.'^ 
My misapplication of the doctrine was facilitated by a misprint in Professor Pigou’a 
statement of it. 

* Economic Journal, Vol. xxii., p. 200. 

* Economic Journal, Vol, xx., pp. 287, 469, 463 et passim. Article on “Prob- 
ability ” in the Encychpadia Britannica (11th edition), Section I. 

^ Theory of Moral Sentiments, Part 111, Ch. 2. 

® As I have pointed out, Economic Journal, Vol. xiii., loc. cif. 



UUNB, 1913 

one of those which Professor Pigou has handled, is that which 
relates to the effects of discrimination in a r^.gime of monopoly.’ 
Supposing with him that the law^ of demand is linear, and that 
the law of constant refnrn holds, T find with him that the mono- 
polist will produce the same quantity after discrimination as 
before/^ But 1 have not af tended particularly to the alteration 
of the output: which, as pointed out by Professor Pigou, has 
not the significance in a regime of monopoly which it has in one 
of competition/'^ He uses it here only as a stepping-stone towards 
a (fuaesituni wliich I have sought more directly. 

The only otlnu' remark which seems called for in connection 
with the problems in my second section is that they are nol 
open to the criticism which has lately been directed against 
Professor Pigou as one “trained in the mathematical school,” and 
ac^cordingly apjdying a well-rounded theory of monopoly wliidi 
does not take account of the incompletenesfi characterising 
rtionopoly in the concrete. My conception of a monopolist seeking 
a maximum of gain, subject to linutatioyis imposed by the threat 
of competition, by public spirit (or State control), admits, I 
think, of degrees much clearer than the expressions commonly 
employed in a similar connection, such as “equal sacrifice,” or 
“not charging what the traffic will not bear.” ^ Not that I mean 
to endorse the criticism as applicable to Professor Pigou. A sense 
of continuity is not likely to be wanting in the .vdlower of him 
whose motto is Natura vov facit solium. 

F. Y. Pdgewokth 

^ Wealth mul Welfare, p. 

From tho equatioiis indicated at p. 440 et seq. in the Economic Journai,, 
V’^ol. XX., it appears that if and £2 are the proportional deviations of the output 
in consequence of discrimination from what it was before discrimination 

since - i^/(l -f- 8; ^ 2 = -> 8). 

Loc. cit., § 17. 

Quarterlj/ Journal of Economics, Vol. xxvii. (1913), p. 384. 

» See Sect. 2, p. 216 (EroNoMH' Journal, Vol. xxii.) et passim. 


English Loral Government: the Slorij of the King’s Ifighway. 

By Sidney and Beatrice Webr. Miongmaiis. 1913. Pp. 

x + 279. Price 7.?. 6rf.) 

Students of English Local riovcvmnent, in common with 
the community at large who suffer from the defects of that 
Government, though they may not study eithtjr their causes or 
their cui’e, owe to Mr. and Mrs. Sidney Webb, to whom they 
already owe so much, a new debt of gratitude for the Story of 
the Kinej’s Highway. The story is well told. The lessons to be 
drawn from it are clearly brought out, not in a spirit of 
dogmatism, but by skilful presentment of such facts and con- 
siderations as are essential for a true underslanding of the road 
problems, which for centuries baffled our forefathers, and some of 
which remain to puzzle the reformer of to-day. The book 
contains a great mass of material : an exposition of a very com- 
. plicated and little-known branch of law ; a collection of facts of 
great historical and antiquarian interest ; and a scientific study of 
most important questions affecting the organisation and adminis- 
tration of government, which, after many centuries of inter- 
mittent neglect and spasmodic effort, are still in great part 
unsolved. And the authors succeed in weaving the whole into a 
story iKissessing almost the fascination of romance; not, indeed, 
one of the breathless romances of to-day, but one of the leisurely 
eighteenth-century kind, such as delighted Sir Walter Scott’s old 
friend, who knew that, even if she w-ent to sleep during the 
reading, the conversation in the cedar-parlour would still be going 
on when she woke up. 

Nine chapters are devoted to the past, and one short chapter 
to the present and future. The conclusions as to “what is to-day 
required in the organisation of our highways ’’ are contained in 
one or two short paragraphs at the end of the book. This alloca- 
tion of space is more easy to justify than would appear at first 
sight. The true direction of reform for what remains to be 


reformed is made abundantly clear by a study of the failures, the 
record of which forms the bulk of the story. Indeed, the book 
might have had a second title, “Muddling Through.” The whole 
history is one long story of failure — failure of central organisa- 
tion, failure of local administration, failure to provide funds for 
decent maintenance, failure to put the financial burden on the 
right backs, failure to make even a tolerably satisfactory use of 
the money that \\as spent. And yet, spite of all these failures, 
which no one who reads the history can deny, in the year 1913 
the King’s Highway in England passes over what are unques- 
tionably* the best roads in the world. 

How" did we get them? 1^he question is more easily asked 
than answered. The materials for an answer are mainly wanting. 
But this much at least is (dear. The original conception of a 
road — its legal conception still— was not a strip of land, with 
definite boundaries and a specially prepared surface, but merely 
a “right of way enjoyed by the public at large along a ccjrtain 
customary course.” In early British times the roads were cer- 
tainly of this latter kind, and the Bidgeway along the top of the 
Berkshire Downs, abov(‘ the Vale of the White Horse, remains 
to this day as an (*xamp]e. Then came the Bomans, and built 
roads in the modern s(ujse all ov(‘r the (country. 'Jdio bulk of them 
are in use to-day, and on the most famous of all, the Watling 
Street, the Boman ))av(‘m(mt was actually in situ near Atherstone 
within the memory of men still living. But h(U'e and there, as 
on the line of llie Eosseway, near Leamington, or on the Ermin 
Street, near Epsom, which Lord Bosebery lately reintroduced 
to the notice of the ])iiblic, they liave practically dropped 
out of use, and have ceased to be highways except in the 
legal sense. If wc are to understand rightly the story of the 
King’s Highway, we must think of it, right through English 
history down to the eighteenth c(uitury, not as a metalled carriage- 
way, but as a route for public passage in a definite direction, 
of indefinite width, liowever, with a legal right for passengers, if 
the road were “fonndrous,” to diverge from it Cven to the extent 
of “going upon the corn ” ; a route which crossed rivers mainly by 
fords, and only occasionally by bridges ; and a route intended, not 
for wheeled vehicles, ))ut for pedestrians, horses, and other 
animals. The famous trivoda necessitas, which imposed upon 
the landowner in feudal times the obligation to maintain the road, 
was not an obligation to put down a tarred macadam surface with 
a steam-roller, but merely to cut the brushwood and stub the 
stumps that impeded free passage. 


The story of the King’s Highway develops along two'^parallel 
lines, the one regarding the physical entity of the road, the other 
the legal, financial and administrative machinery for its main- 
tenance and repair. To deal with the physical side first, the 
startling thing about it is to find how exceedingly modern 
is the modern road. In 1736 Lord Hervey wrote from Kensington 
that “the road between this place and London is grown so 
infamously bad that we live here in the same solitude as we 
should do, if cast on a rock in the middle of the ocean, and all the 
Londoners tell us that there is between them and us an impass- 
able gulf of mud.” And even forty years later, on the great main 
roads of the country, Arthur Young’s Journeys records defects 
such as “rutts, which I actually measured, four feet deep, floating 
with mud only from a wet summer ; what therefore must it be 
after a winter?” He describes the turnpike to Newcastle as “a 
paved causeway, as narrow as can be conceived, and cut into 
perpetual holes, some of them two feet deep. ... I must in 
general advise all who travel on any business but absolute neces- 
sity to avoid any journey further north than Newcastle.” This 
latter road was, be it observed, a turnpike ! Mr. and Mrs. Webb 
give abundant reasons for dispelling the common belief that a 
turnpike road meant a good road. Much of the money collected 
by the Turnpike Trusts was wasted in process of collection, 
and much of wrhat remained was either muddled away or actually 
embezzled. The turnpike roads never amounted to more than 
25 per cent, of the total. But bad as these w^ere, the parish roads 
were even worse. As for the central Government, it did prac- 
tically nothing. Telford’s Holyhead road is the one con- 
spicuous exception ; though in Scotland General Wade did build 
roads on a considerable scale, the landowners, it is interesting to 
note, paying half the cost. 

Physical and administrative considerations are alike involved 
in the century-long struggle which even yet is not terminated : 
whether the road should be made to suit the traffic, or the traffic 
should be restricted to suit the road. The London Borough 
Councils, who desire to prohibit motor omnibuses because their 
roads are not strong enough to bear them, have their prototype 
in James 1. forbidding “any four wheeled vehicles, or the carriage 
of more than one ton of goods at a time, as the vehicles bearing 
‘ excessive burdens ’ so galled the highw’ays, and the very founda- 
tions of bridges, that they were public nuisances.” Act after Act 
regulates the number of horses to a vehicle, the width and height 
of the wheels, *tbe^ minimum size of tyres — even to nineteen 
No. 90 — ^VOL. xxiii." R 


inches iii J^readth— the spacing from front to back wheels, and so 
on, and so on. The introduction of stage coaches was met with 
a passionate protest that their use 'would enervate the hardy breed 
of horsemen. The introduction of haclmey coaches into London 
wits objected to as an unwarranted invasion of the secular rights 
of the watermen. Hardly had the coaches secured their footing 
than there fell upon them the “calamity of railways,” which in 
their turn were to ruin the fox covers, put a stop to the breeding 
of horses, and bankrupt the Turnpike Trusts. Then came the 
bicyclist, and the country police promptly prosecuted him for 
“scorching,” while the country gentleman denounced him as a 
“cad on castors.” The kaleidoscope shifts, and we find the rail- 
ways complaining of the competition of motor cars on the open 
roads, and trarncars in the streets of the great towns and their 
suburbs. And so we come down to to-day, with the municipal 
tramway protesting against the competition of the company’s 
motor bus. And perhaps the aeroplane will supersede the motor 
bus. And then at length the road question will be at rest. 

To turn to the administrative side. The history of turnpikes 
extends over a little more than two centuries. It began with a 
toll gate on the Great North road at Wadesmill, in Herts, under 
an Act of 1663 ; and it practically ends with the Local Govern- 
ment Act of 1888. But the bulk of the Turnpike Trusts — there 
were over 1,100 of them in all — were created in the latter half 
of the eighteenth century, and the early days of the nineteenth. 
They were essentially a makeshift, and to expect their success 
was to expect the impossible. Their constitution was prepos- 
terous. All the local somebodies — fifty or a hundred in number — 
were nominated under the Special Act as Trustees, and the great 
bulk of them never attended. They kept no proper form of 
accounts, and were responsible to nobody. They could afford 
to pay for a competent surveyor, even had such men existed. 
They were at constant war with the inhabitants of their districts, 
from whom they often exacted exorbitant tolls for passage over a 
few hundred yards of road. Gradually they came to hand over 
their functions to contractors, who farmed the tolls for hundreds 
or even thousands of miles of turnpike. The contractors made 
fortunes. But the road maintenance was scamped; and those 
who had lent money to th^ Trusts not infrequently lost it. The 
road users complained that for the maximum of payment — the 
toll revenue at one time amounted to one and a half millions per 
annum — they obtained the minimum of benefit. Only where, 
near the Metropolis, or round some great local centre, such as 

1913] WBBB: Mmtisn wvbenmbbt* 281 

Bristol or Exeter, a single fcust succeeded in absorbing its 
smaller neighbours, and establishing an undertaking big enough 
to employ a competent surveyor-even the great Macadam 
himself, or his less-known son — were the results satisfactory. 

The Turnpike Trusts had at least one advantage over the 
Common Law road authority, the Parish, in the fact that they 
could not be indicted for neglect of duty. Down to our own times, 
the Common Law has placed upon the Parish the obligation to 
maintain its roads. And if the Parish did not do its duty it was 
indicted and convicted with all due process of law, not uncon- 
nected with very considerable expense, at the Assizes. And, 
apart from the grotesque unfairness of requiring a hamlet on the 
route from Dover or Southampton to London to m«ointain the 
route for the great through traffic between these ports and the 
Metropolis, the Parish had no machinery for carrying out its legal 
duties. For centuries it could not levy a rate.* The inhabitants 
were bound to give their personal services. Of course, an extra 
legal system of commutation sprang up; and influential persons 
who could best afford to pay got off cheapest. And, equally of 
course, the roads 'were inadequately maintained. Puts, when 
they got more than four feet deep, were ploughed over — this 
method is being recommended as a modern improvement on the 
“ dirt ” roads of America to-day — or a cartload of stones was thrown 
into some exceptionally “foundrous*’ place. Naturally, the 
farnlers did not see why they should make, at their own cost, 
roads, better than they needed themselves, for the sake of out- 
siders. At length statute labour died out, and the highway rate 
took its place. But it was reserved for our own generation to 
sink the Parish in a wider area, and to hand over the maintenance 
of roads to the Union and the District Council, and even, though 
in a degree varying widely from county to county, to the 
County itself. Doubtless this process of “maining,'' as it is 
technically called, will be carried further in the immediate future. 

But even this is not the end. The whole cost of road main- 
tenance — subject to existing grants-in-aid from the central 
Government-^now falls upon the owners and occupiers of real 
property. And if it be admitted that even now road users as such 
get off too lightly in comparison with owners of real property, 
and that with the rapid grow^th of motor traffic this is likely to be 
still more the case in future, some readjustment must be made. 
One school of reformers would follow the French example, and 
transform the great main roads of the country into routes 
nationales. The other school, to which, as might be expected, 

B 2 




Mr. arid Mrs. Webb declare their adhesion, believe in central 
control and supervision, resting on the basis of central grants-in- 
aid on a generous scale. 

The suggestions which Mr. and Mrs. Webb make for future 
legislation are on quite a modest scale. They think that some 
exceptional contribution towards the cost of highway maintenance 
should be levied on the owners of vehicles of an exceptional 
character. Probably the motor omnibus and the heavy com- 
mercial motor would both fall within this description, and perhaps 
also fast motor cars in excess of a certain weight. They suggest 
that grants from the Eoad Board should be available for the 
maintenance as well as the improvement of highways (either 
already “mained” or which should be “mained”) maintained by 
County or County Borough Councils and the Councils of Boroughs 
and Urban Districts having more than 20,000 population, and that 
grants in aid of maintenance of important roads, “perhaps equal to 
20 per cent, of the actual annual expenditure,” should be made, the 
requisite funds being partly provided by means of a reasonable 
increase in licence duties and motor-spirit duties. This proposal, 
if it is meant to include the existing grants in aid. would hardly 
commend itself to highway authorities as adequate, as it would in 
many cases reduce the State aid now given to County Councils 
for their main -road expenditure. They suggest also that minor 
highway authorities should have power “voluntarily to cede their 
road administration to County Councils.” But this power already 
exists under the Local Government Act, 1888, though it is largely 
ineffective, partly because the minor authorities are not willing 
to give up their power to keep the maintenance in their own 
hands, partly because a district road before being handed over to 
a County Council must be placed by the District Council “in 
proper repair and condition to the satisfaction of the County 
Council,” and partly because County Councils are not under any 
obligation to “main” roads, and in most Counties are unwilling 
to do so. The suggestions of the authors are all in the right 
direction, but probably no satisfactory solution of ihe road problem 
will be reached until the promised readjustment of local and 
imperial taxation has been effected and a proper classification of 
roads has been made based on the character and amount of the 
traffic using them. 

The road that Mr. and Mrs. Webb have led us has been long 
and devious, perhaps even occasionally “foundrous.” But the 
ramble has been most interesting throughout. Perhaps in a 
second edition the authors will help us to answer a most interest- 


ing question which they leave untouched : How during the latter 
part of the last century the farmers, recalcitrant all the time 
against unnecessary expenditure, yet came to transform the bye 
roads from the mere tracks, which apparently they were not 
more than two generations back, into excellent macadamised 
roads as we see them to-day. 

George S, Gibb 
W. M. Acworth 

English Farming Past and Present. By Rowland E. Prothero. 

(London : Longmans, Green. 1912. Pp. 504.) 

We have read books on English agriculture by the dozen : 
books by German professors and French doctors, by politicians, 
students in research and apologists for this view or that ; anl we 
have generally laid them down with the feeling* that these people, 
honest folk, no doubt, and often learned, do not understand our 
English agriculture and do not know our English countryside. 
Mr. Prothero is none of these. He combines the scholarship of 
Oxford with the insight that is born of business contact with the 
economy of agriculture. We can do no more than pick out some 
of the main threads of his comprehensive work, leaving to the 
masterly art of the author their combination in picturesque and 
yet solid narrative. 

Mr. Prothero’s critique of contemporary agricultural literature 
makes three things abundantly plain. The first is the fact of 
our constant indebtedness to the foreigner, a debt which in the 
nineteenth century we amply repaid. In the seventeenth century 
Samuel Hartlib (who, like Richard Arkwright, was something of 
a pirate), after noting the inferiority of English cheeses to those 
of Italy, France, and Holland, reproaches the English husbandman 
for his insularity. Sir Richard Weston (Circ. 1650) calls attention 
to the Flemish custom, unknown to him in England, of taking a 
farm “upon improvement,” on the basis of a twenty-one years’ 
lease, which provided that “whatsoever indifferent persons . . . 
should judg the farm to bee improved at the end of his Leas, the 
Owner was to paie so much in value to the Tenant for his improv- 
ing it ” (p. 113). England arrived at this in 1883. It was by the 
skill of Vermuyden and his Dutchmen that the fens were drained 
in the days of the Commonwealth. The Inquisition drove valu- 
able brains to England. Jethro Tull, who invented the first 
practical drill, had been impressed during his foreign travels “with 
the cultivation of vineyards in the south of France, where fre- 


qu6nt jpiloughings between parallel rows of vines not only cleared 
th6 land, but worked and stirred the food-beds of the plants until 
the vintage approached maturity” (p. 171). In the seventeenth 
century foreign breeds of horses were extensively imported : “so 
great was the admixture of blood that Bradley, writing in 1727, 
thinks the true bred English horse hardly exists” (p. 183). 
Weston, a refugee in Flanders during the Civil War, brought back 
the turnip, and was therefore accounted by Arthur Young “a 
greater benefactor than Newton” (p. 107). From the same 
country came the onion, the cabbage, and the potato. Neither 
men nor ideas nor capital were in those days immobile as between 
the nations. 

In the second place, the progress of agricultural knowledge 
was "uneven. Tusser and Fitzherbert carried agricultural science 
but a very little way further than Walter of Henley, the didactic 
steward of the manorial economy. What was new was their 
record of the social changes which were fast dissolving the frosted 
patchw^ork of English feudalism. Even in 16f51 Hartlib offers the 
following prescription against the Rot : “Take serpents or (which 
is better) vipers, cut their heads and tayla off and dry the rest to 
powder. Mingle this powder with salt, and give a few^ grains of 
it so mingled now and then to your Horses and Sheep” (p. 111). 
But from Tull onwards there is no break in the progress of agri- 
cultural knowledge, in peace or in war (for Napoleon never got to 
England), in fine weather or in wet, in the halcyon days oi high 
farming or through the grim economies force.d on the last genera- 
tion by the strain of American competition. One by one the 
natural sciences are placing the wealth of their discoveries at the 
service of agriciiltnre. This continued and continuing progress 
of knowledge is a fact which might be remembered by theorists 
when they formulate a law or statement of tendencies in 

The third j)oint is a simple fact of human nature, or illustra- 
tion of the Law of the Division of Labour. “Albeit,” says the 
Doctor in the Discourse on the Common Weal, “we labour not 
much with oure bodies as youe say, yet youe knowe we labour 
with oure myndes, more to the weaknynge of the same than by 
anie other bodily exercise we can doe. ...” Truly study weakens 
the mind. Lecturers in Political Economy make poor directors 
of companies. Thomas Tusser, Richard Weston, Robert Bake- 
well, Arthur Young, all failed as practical farmers. Exception- 
ally, Ricardo made a fortune on the Stock Exchange, and then 
wrote good Political Economy. 

1913] l^BOTOBBO : maum FABMtNG PASX AKB PBBSBKa? 236 

Politics, economics, sociology (if there be such a thing), and 
law meet in the history of land tenure. In Chapter 2, ‘*The 
Break-up of the Manor**; Chapter 3, “Farming for Profit**; 
Chapter 14, “The Eural Population’’ ; Chapter 16, ♦Tithes’* (a 
most valuable contribution in an obscure field) ; Chapter 19, 
“Conclusions,” Mr. Prothero gives us in kaleidoscope the history 
of a little verb tenet e, to hold. We should like here to ask him three 
questions for possible notice in the second edition which this book 
will doubtless soon reach. “For the first 140 years of the period 
(1189-1417), the lords of Berkeley steadily pursued the plan of 
converting customary tenancies and tenancies of newly enclosed 
lands into freehold of inheritance at fixed quit-rents which repre- 
sented the rack-rents then current. . . . This family policy was, 
however, completely reversed by . . . Thomas, third Lord 
Berkeley (1326-61). Many hundreds of the freeholds created by 
his predecessors were repurchased and let at rack-rents” (p. 45). 
What exactly were these freeholds of inheritance? Challis, Real 
Property (p, 3), says “ancient quit-rents, which affect freehold 
lands held for a fee simple and are undoubted incidents of their 
tenure, still exist ; but in practice these must be at least as old 
as the year 1290, in which year the statute of Qma Emptores 
made it thenceforward impossible for a subject to reserve 
a rent as incident to tenure only.” Were there special 
circumstances which enabled the lords of Berkeley to create 
freeholds at quit-rents during the forty years after 1289? 
The second question is : How important were cottagers 
in mediaeval times ; are they in any sense the lineal an- 
cestors of the modern labourer? “Beside the villeins, there 
were other orders of bondmen — such as . . . the bordars and 
cottars” (p. 22). “Cottagers, says Kent, vho live at the sides 
of the common, generally neglect the advantage they have before 
them” (p. 305). A gap of six centuries separates these two 
quotations, and the cottager is not indexed elsewhere. The study 
of the manorial surveys seems to reveal little about them. Some 
cottagers are mentioned among the freeholders and some among 
the copyholders. Is it true that the class of cottager is irrelevant 
for purposes of law and even of rural economy, the great divisions 
being on the one hand between freeholders, leaseholders, and copy-^ 
holders of different grades, and on the other hand between 
farmers and the employees of farmers, whether farm servants 
or labourers in the parish or labourers from outside? And 
again, after following up freeholds (not freeholders) to p. 150 
we are then instructed to see Landowners, Turning for prefer- 


ence to Yeomen, we read at the end of an instructive note (p. 296, 
note. 4) : “The definite restriction of the word to farmer-owners 
is a comparatively modern usage belonging to the nineteenth 
century. %e Dictionary of Political Economy, s.v. Yeoman.** 
Again exercising the liberty of a critic we turn rather to Sir 
Thomas Smith, De Republica Anglorum (1566), who says 
(Lib. I. c. 23) that yeoman means one who “is a freeman borne 
English and may dispens of his owne free lande in yerely revenue 
to the summe of xls sterling.*’ Now one remembers as a boy 
how quaintly the Reform Act of 1832 read : “In the counties 
the franchise hitherf-o confined to 40.9. freeholders was given to 
IJIO copyholders and £50 leaseholders.” Why, one asked, this 
discrimination? Why, when men were buying and selling 405. 
freeholds, did not the reforming Parliament extend the franchise 
to 405. copyholders and £10 leaseholders? Is the explanation 
possibly this, that economic change from the sixteenth century 
onwards led to the emergence of so many people of the yeoman 
type, yet without the yeoman’s freehold, that they had perforce to 
be allowed the name? Latimer’s father, as Mr. Prothero reminds 
us, was a yeoman, but had no land of his own (p. 296, note 4). In 
1832 Parliament tried to get level with the new situation, which 
was only four centuries old. That done, the yeoman could be 
restored to his original denomination, an occupying owner. 

One supreme question overshadows every other in English 
agriculture, the question of Enclosure. Its literature grows 
yearly. Within the last two years we have had the impassioned 
protest of Mr. and Mrs. Hammond, the exact scholarship of 
Professor Gonner, the lively and inspiring research of Mr. 
Tawney. Mr. Prothero ’s verdict is that of a sympathetic judge 
versed in the economy of agriculture, with the cases of the 
county reporters at his finger’s end. “It has been suggested,” 
says he, “on the authority of passages in his tract on wastes, that 
Arthur Young learned to deplore his previous crusade against 
village farms, when he saw the effect of enclosures on rural life. 
What Young deplored was the loss of a golden opportunity for 
attaching land to the home of the cottager. But he never faltered 
in his conviction of the necessity of breaking up the opeuf fields 
and dividing the commons” (p. 215). And again, “The divorce 
"tof the peasantry from the soil, and the extinction of commoners, 
open-field farmers, and eventually of small freeholders, was the 
heavy price which the nation paid for the supply of bread ai^d 
meat to its manufacturing population ” (p. 149). 

The Corn Laws are now of historical interest only, the only 


possible connection with modern times being furnished by the 
tradition of Imperial Preference, which, as Mr. Prothero observes 
(p. 273), was present in all the Corn Laws from 1791 onwards. 
Treating of their growth in England, our author says : “In 1670 
the com laws became more frankly protective” (p. 143). Seeing 
that to the end of the eighteenth century England was a wheat 
exporter, and that on occasions of scarcity the import duties, like 
the export bounties, were suspended — e.g., in 1698, 1709, 1741, 
1757-9 — “protective” seems an unsuitable word. The import 
duties of 1670 were quite secondary to the regulation of exports 
in this period. “Fostering” was nearer their intention. Only 
after 1815 were the Corn liaws frankly protective, and that fact 
killed them in 1846. Of the Corn Bounty, Mr. Prothero writes 
p. 259) : “In the reign of William and Mary an addition was 
made to the system ” — to wit, a bounty of 5^. per quarter on 
home-grown wheat exported. This is not quite accurate. For, 
as an American writer, Mr. Gras, has shown, the first Com 
Bounty lies buried in a money grant of 1673, ami in 1683 John 
Houghton estimated that in all about €70,000 yearly was needed 
for the payment of corn export, premiums. Its existence was not 
unknown to the Parliamentarians of the early nineteenth century. 
The Eeport from the Select ('ornmittee on the Agriculture of the 
United Kingdom, 1821 (p. 18), speaks of the bounty policy: 
“which, more desultory in its operation and more frequently inter- 
rupted by arbitrary interference, prevailed under the Princes of 
the House of Stuart.” Speculations, therefore, as to the design 
of the Whigs in introducing this policy in J689 require revision. 

“The limit of home prices, at which the imjX)rtation of grain 
was allowed at nominal duties, was raised in the case of wheat 
from 48.<?. in 1773 to 85.9. in 1815. Below those limits, duties, so 
heavy as to be practically prohibitive, were levied on imported 
corn” (p. 273). 85 is a misprint for 80 (the figure being 

correctly given in Appendix 111, on the Corn Law^s, which con- 
tains also an account of the Assize of Bread). Moreover, there is 
a distinction between the Acts of 1773 and 1815. That of 1815 
was not prohibitive, it was a prohibition. When the ports were 
closed no com could come in, and there was no revenue at all. 
This was a breach in Corn Law tradition. When Eobinson pro- 
pp^^d it for the first time in the third draft of the measure which 
became the law of 1815, Alexander Baring, the member for 
Taunton, suggested that the Government proposed prohibition 
rather than a graduated duty, in order to catch at a little popu- 
larity, lest the idea of a duty upon corn should excite an outcry 


(Hansard, XXX., 70), Robinson denied it, but gave nd alterna- 
tive e:i|:planation. Mr. Prothero next refers to the encjouragement 
which the sticky sliding scale of 1828 gave to com speculators, 
having in view, no doubt, Mr. David Salomons’ pamphlet on the 
subject, and concludes: “Yet in spite of this experience the 
graduated system was maintained in the legislation of 1842 and 
1845” (p. 273). But surely, if the Act of 1828 was sticky, that 
of 1815 was stickier still, and encouraged still further the holding 
up of supplies until free entry was obtained at the no-duty point. 
Peel’s sliding scale, by its lower range and slighter changes, 
removed, and was designed to remove, the weaknesses of the scale 
of 1828. 

It is something of a joke against economic historians that they 
expire about 1820, and in their death-song announce the consum- 
mation of the Industrial Bevolution. To an economist Chapters 17 
to 19 of Mr. Prothero’s book are the most interesting of all, being 
full of new and recent matter. If so far we have been pacing through 
the centuries, now we begin to gallop. Change succeeds change. 
Depression is followed by prosperity, which is again followed by 
depression, which, in its turn, is painfully surmounted. Methods, 
markets, persons are challenged and reformed : the old gives place 
to the new. On this note we could wish to end, but there are 
two sentences in the conclusions (in which the author favours a 
peasant proprietary for England) which seem to ask for criticism. 
“The Small Holdings Act has provided a certain quantity of land. 
But its methods are so faulty that its operations are necessarily 
limited” (p. 415). Does none of the fault lie with landlords? 
We who belong to colleges in Oxford and Cambridge know some- 
thing of the average landlord’s feelings on the subject, and the 
farmer — who is the only person with a good cause lor grumbling 
— has expressed his. If small holdings are to be discussed, they 
deserve a chapter to themselves, including, for example, an 
account of the successes that are being won in Cambridgeshire, 
as well as a criticism of the difiQculties that are being experienced 
in some other parts. We could wish, too, to delete the last 
sentence of the book. “For the purpose of this enquiry” — Mr. 
Prothero is referring to the ascertainment of the bare unimproved 
value of agricultural land — “the Valuation now in progress would 
be only a costly farce if it were not also a serious injustice ” (p. 
418 ). 

Injustice! The word brings us back to the tragedy which 
we had almost forgotten in our admiration of the gallant 
resistance made by British farmers during the recent prolonged 

191^1 iiBAJ* : TEOY, A mvnr m homekic geogkapht 289 

depression. How many copyholders and poor commoners 
must have gone to their graves with' this word on their lips ! 
WAs not injustice most unjust when — as now — ^the law was on 
its side, when there was no longer a Court of Star Chamber to sit 
with unconstitutional promptness on encroaching landlords? 
A Parliament of landlords turned the argument from justice to 
necessity, and declared a peasant proprietary to be economically 
incapable of catering for an industrial England, but what shadow 
of a chance did it give to the peasants to try their hand ? Are we to 
condemn the customary tenants for blindly resisting enclosures 
in the eighteenth century (in the fourteenth and fifteenth they often 
practised it among themselves) when enclosure meant exile or 
degradation? For what with doubtful titles and Hwyers' fees, 
bills for quickset and new roads, enclosure meant to the small man 
nothing less than this. Sheep are good things, and turnips are 
good things, and both are better than foxes;* but men are oetter 
than them all. If Coke saved England by the ploughshare, why 
might he not have saved it v ith the ploughshares of an organised 
peasantry? Or was the yeoman of Elizabethan England a myth, 
and was his representative at the Beginning of tlie nineteenth 
century incapable of the things wliich the Danish peasants did 
half a century later, w^hen they made themselves expert and 
specialised farmers, supplying the industrial population of 
England, Danish law and Danish Government assisting? But we 
are ourselves in danger of gliding into exaggeration , like Macaulay 
in his caricature of the English country squire. For there have 
been, and still are, many just and generous landlords in England. 
Times, however, are changing. Mr. Prothero pleads for a peasant 
proprietary. We echo his desire. Only the landlords of England 
can restore to sure success the peasantry they once dethroned. 
This restoration is the biggest call that England has ever made 
on the chivalry of her erstwhile rulers. 

C. B. Fay 

Troy: A Study in Homeric Geography, By Walter Leaf, 
Litt.D. (Macmillan and Co.) 

The modern fashion of seeking for economic causes has led 
Mr. Leaf to write a very interesting book. Why was Troy so 
rich and important? M. Berard’s answer is well known. In 
early times navigation by sea was difficult and dangerous ; con- 
sequently it was easier to carry goods over an isthmus than to 
round a promontory. Those who could hold the isthmus could 


levy toll. Mycenae, rich in gold, is the most obvious illustration of 
the ^isthmus law.” M. B^rard applied this law to Troy; but 
Troy is not on an isthmus ; could it ever have been worth while 
to carry over from Besika Bay to the Hellespont? Mr. Leaf’s 
theory, which is suggested by M. B^rard’s, is, briefly, as follows : 
A current runs down the Hellespont from east to west. During 
the greater part of the year there are strong winds from the 
north or north-east ; consequently small ships are often detained 
off the entrance to the Hellespont for a considerable period of 
time. Ancient ships, with jars (not galvanised iron tanks) could 
not carry much water. Therefore ships from Greece going to 
the Black Sea must get water at the entrance to the Hellespont 
to sustain their crews during the enforced delay. The only place 
where this can be done is at the mouth of the Scamander. Thus 
they who can hold the mouth of the Scamander can effectually 
block the Hellespont. This is what, in Mr. Leaf’s view, the 
Trojans did, and prevented direct trade between Greece and the 
Black Sea ports. The result was an annual fair at Troy (King 
Priam taking heavy tolls) : to this fair came traders along four 
well-marked trade routes, whicli are faithfully represented in the 
catalogue of the Trojan allies. At last the Greeks got tired of 
paying tolls and combined to smash the moflopoly. These trade 
routes are as follows : First, by land from Europe north-west of 
Troy, from the river Axios through Thrace to the Hellespont; 
second, by sea from the ports on the south shore of the Black 
Sea ; third, by land from Phrygia and Mysia ; fourth, by sea from 
Lycia — probably to Assos in the southern Troad on the gulf of 
Adramyttium and then overland to Troy. Mr. Leaf traces these 
routes with learning and ingenuity, though it seems possible that 
the Pelasgians (Mr. Ijeaf has a separate chapter on these puzzling 
folk) from Larisa may have been allies from the Thracian route ; 
but that question cannot be discussed here. If, then, Mr. Leaf 
is correct, we have four trade routes converging at Troy, apart 
from the trade from Greece, The excavations at Hissarlik have 
established a series of cities or fortresses on the same site ; the 
sixth of these cities, with its great Mycensoan walls, is clearly 
Homer’s Troy. But the earlier cities were also rich. Dr. 
Schliemann’s gold treasure probably came from the second. 
After Homeric Troy, the town is never important except as a 
tourist resort (Alexander of Macedon and Julian the apostate were 
two of the tourists who visited post-Homeric Troy). A success- 
ful theory has to explain why Troy was of great importance in 
the second millennium b.c., but never afterwards. This is the 

1913] b5hm bawebk kapital und kapitalzins 241 

problem, and it is only fair to state Mr. Leaf’s summary of his 
solution in his own words 

“We see now why it was that Troy never recovered from its 
capture by the Achaians. ... It was not the capture, but Greek 
colonisation, which destroyed Troy. It had one merit only — that 
it could block the Hellespont to the west. As soon as the west 
had taken possession of both shores of the Hellespont, Troy was 
for practical purposes useless.” 

But, it may be asked, could not Trojans still have continued 
to levy toll on the Black Sea trade, just as till recent times the 
Danes at Elsinore levied toll on the Baltic trade? And why did 
not the Black Sea trader wish to trade direct to Greece? If so, 
he should have helped the Greeks, and not the Trojans. And 
was Greece always so united that it would not have paid some 
later Priam (before the era of moderately large ships wdth many 
oars) to start the blackmailing business agaip? Also, it cDuld 
not matter much to the Thracians, who brougl\t their wares to 
the Hellespont, whether they found Greeks or Trojans there so 
long as there was a good market. Yet Thracians fight for the 
Trojans, They may have been mercenaries, but what is the 
evidence that they were? These observations are only intended 
to indicate that the argument, as it stands, is too compressed. 
The main contention seems to be sound. The excessive wealth 
of Troy can hardly have been due to anything but blackmail — 
that is, the possession of some advantage of a monopolistic kind 
which enables the possessor to exact tolls far in excess of the 
services rendered. Such has probably at all times been the most 
potent method of acquiring great wealth. The power of causing 
great inconvenience is commonly more valuable than the power 
of rendering important services. 

The book does not deal solely with economic causes and trade 
routes, but the other problems of great interest which Mr. Leaf 
attacks are not of a kind which would necessarily interest readers 
of this Journal. Except for one most unfortunate phrase on p. 2, 
this book is not marred by the uDfairne>ss and rudeness which are 
too common amongst scholars when they discuss Homeric 
problems. C. P. Sanger 

Kapital und Kapitalzins : Positive Theorie dcs Kapitales. Dritte 
Auflage. Zweiter Halbband. Professor und Einanz-Minister 
E. VON Bohm Bawrrk. (Innsbruck : Wagner. 1912.) 

This work on Capital and Interest has long been beyond need 
of laudations, in noticing Part II. of the new edition of the 


constructive part of it, we deal simply with the various changes 
an(J supplements that have been made by the author after more 
than twenty years’ endurance of European and American 
criticism. From stress of official duties he was unable to make 
alterations in the second edition (1902) ; but in due time he has 
found leisure to do justice to himself and work vengeance on Jiis 
opponents in the third edition. Part I. of it appeared in 1909. 
Part II, is now before us.^ 

The author has all his old energy. He seems to have mastered 
all that has been written directly, or even indirectly, bearing on 
his chosen subject. The articles and pamphlets and books 
thereon turned out by the Press of Europe and America year after 
year since 1889 (the date of his first edition) form a vast pile ; 
and he has read it all and taken the heart out of it. Everything 
of interest and value on Interest and Value seems to be known 
to him. This makes the present book in its two parts not only 
the statement and defence of his own theory, but a history and 
digest of a great part of recent economic literature. Pie himself 
disclaims^ approach to exhaustive history, and will have it that 
he has only dealt fully with a chosen few of the writings and 
authors. But his ideal of exhaustiveness is a very high one. He 
knows, indeed, that many will find it much too high, and he 
warns the general reader away from his “Excursus” as a food 
he cannot be expected to enjoy. Perhaps the Excursus will have 
the more delicious taste for the critics wffio find their own measure 
meted out'to them again there without stint. 

The text of the wdiole book (Parts I. and II. conjoined), as 
distinguished from the Excursus, has undergone four chief 
changes. The references to recent writings have distended the 
third section of Book 1 . to twice its original size ; it is the section 
on conflicting definitions of capital (Sireit um den Kapitals- 
hegriff), A new section® appears in Book II. on “An important 
parallel to the roundabout w^ay of production by capital.” The 
parallel is found in the improvements increasing the utility and 
lengthening the life of durable goods (like boots or houses), im- 
provements involving greater outlay than before but with clear 
physical (or “technical”) advantage and (under suitable condi- 
tions of the rate of interest) wdth economic also. The analogy, 
however, is not perfect. 

1 Notices in this Journal of recent publications of the author appeared in 
June, 1900, Strittige Fragen ; March, 1901, Kapital und Kapitalgins~-~Oeschichte 
und Kritikf 2nd ed. ; September, 1904, Zinsliteratur in dtr Qegenwart ; December, 
1910, KctpiUil und KapUalzins — Positive Theorie, Srd ed. , Part 1. 

® Preface to Srd ed. , pp. xi, xv ; cf. xiii. 

• Section II., pp. 162-171. 

1918] b6sm bawb»k: kapitab tod kapitalzins 


The foregoing changes are in Part I. The others are in 
Part II. There is a new subsection (ix.) of Book III., Section L, 
devoted to a summary (Zusammenfassung) , and there is a PiSy- 
chological Postscript (Psychologisches Nachwort), Subsection x., 
ibid.), both in connection with the theory of value. The fifth 
change is one of arrangement ; all the sections on value are now 
in one Book, the third. 

The summary is a careful re-statement of the cardinal prin- 
ciple of Final Utility, on which the whole edifice depends, and a 
classification of goods so estimated. The author declines to admit 
Final Disutility as a ground of separate classification (p. 310). 

He admits that in a minority of ca.^es the negative feature 
appears, and then the value of goods is estimaleu not by their 
positive contribution to welfare but by their aid in defeating 
harm. Some would say, the majority includes the cases w^here 
the goods bring pleasure, the minority wheie they prevent pain. 
But our author is careful to explain in this and the following 
section (the Psychological Postscript) that, if the phrases “plea- 
sure** and “pain** are thought to commit him to Hedonism, he 
will have none of them. The Postscript seems very judicious. Many 
of ns, at least, will agree that to bring psychological discussions 
into economics is to introduce disturbing elements there {star end e 
Fremdkdrper) (p. 327). 

Nevertheless, in Excursus x and xi. Professoi Bohm Bawerk 
goes into some detail over psychology, in the tenth dealing almost 
entirely with Professor C)uhel and the quantitative measurableness 
of feelings ; in the eleventh with Bentham and tJevons on future 
wants, “present anticipated feelings,** as entering into estimates 
of present value. He leaves the exact influence of them an oiien 
question (p. 325;, a happy hunting-ground for the psychologists, 
who are not agreed among themselves on the matter. He says in 
effect ; “If I am told that as an economist I ought not to have 
raised the question at all, but relied on the ruling doctrine of the 
professional psychologists, 1 must reply that, alas! there is no 
ruling doctrine’* (p. 326). Yet he sees we must have a working 
theory if, for example, we are to discuss such a motive as provi- 
sion for the future. Lujo Brentano, who frankly calls this motive 
an exception, sui generis, ranking it as an actual present need 
(p. 330), is handled with unusual acrimony. The discussion of a 
kindred subject. Disutility, in Excursus ix , iiroceeds under a 
drier light. It is a very pretty quarrel. Jevons and Gossen had 
both remarked that stage by stage the pain of exertion tends to be 
greater than the pleasure of reward, and the workman, if free to 
do it, will stop just at the point whore the utility and disutility, 


the pleasure and the pain, balance one another. It is not Jevons, 
howeyer, but Professor Edgeworth who introduces disutility 
broadly as a co-ordinate factor in the normal determination of 
value. Professor J. B. Clark would go even farther, and make 
it the predominant partner. But Professor Edgeworth avoids 
this extreme, and is even careful to except from co-ordination 
the cases where the workman is not free to stop, and labour is 
therefore not a variable. He remarks at the same time on the 
liberty of the labourer to change his calling if too disagreeable, 
and his power to stop when he pleases at piecework ; and he holds 
that invariableness is a feature, not of the majority, but of the 
minority of cases. “The desire of diminishing disutility is one of 
the motives which bring about economic equilibrium.” Still, he 
allow^s that the “disutility” is not the vulgar “cost of produc- 
tion”; and Professor Bohm Bawerk, with some reason, claims 
him as practically .admitting that value does not correspond to the 
effort and sacrifice involved in production, when he admits that 
articles freely produced, in the conventional sense, are produced 
at fixed wages and in fixed hours of labour, where no “disutility ” 
can come in at all. The w^hole question betw^een the two 
economists is thus about the estimate of a quantity “not susceptible 
of exact measurement.” ^ Professor Edgeworth is one of the 
critics who fare best in the conflict as a whole. He had made an 
impression on the text of the third book - by bringing out the 
drawbacks of typical examples (like horses) that are^ indivisible 
goods, and the advantage of those (like corn) that admit of “nicely 
calculated less and more.” 

The debate on Disutility, however, was an affair of outposts 
when compared with the battle in Excursus viii. over the relation 
of Cost and Value. Though our author admits that Jevons spoke 
too absolutely when he said, “Value depends entirely upon 
utility. The value of the labour must be determined by the 
value of the produce, not the value of the produce by that of the 
labour,” it was substantially the very position that he himself 
maintains in this Excursus against Professor Marshall and Pro- 
fessor Schumpeter. The Excursus (vii.) on the theory of the 
value of “Complementary Goods” is more nearly a dis- 
cussion among friends, Professor Wieser receiving the largest 
share of the criticism. Our author points out the danger of 

1 Prof. Edgeworth in Economic Joutinajl, December, 1894, p. 724 ; cf. Sep- 
iember, 1894, pp. 618-521, and 719-724. 

* Section II., pp. 382-388 (3rd. od.), See Economic Jouenal, June, 1892, pp. 333, 



treating the alternatives, in an estimate of final utility, cumu- 
latively, as if to be arithmetically added together (pp, 18&~190), 

Eeadere of the first part of this third edition had already 
encountered in its Excursus (i. to v.) discussions akin to those 
that now meet us in Part II. in the formidable twelfth Excursus 
of nearly one hundred pages on the relation of Professor Bohm 
Bawerk’s third reason for the different estimates of the value of 
present and future goods to the other two. The third was “the 
technical superiority of present goods over future “ as means of 
production. Facing the inevitable risks of every attempt to put 
such a case in a nut-shell, we may put our author’s view as 
follows : — The long way of production brings, as a physical 
result, a greater quantity of goods (it may be with a less value 
per unit, but with a larger sum-total of values; to him who adopts 
the long way now instead of procrastinating. Is a regard to this 
physical result to be taken as a distinct and third reason? Our 
author says : “Yes, to get more is not the same reason as to get 
sooner'^ (400 note). The first two reasons were : 0) the pre- 
sumable difference between our wants of to-day, togeiher with 
the means of providing for them to-day, and our wants of the 
future with the means of provision then; (2) the general lii:uian 
tendency to make light of the future. As it is Professor Bohm 
Bawerk’s view that, if the productiveness of the longer way 
ceased to exist, the phenomenon of Interest would cease to be of 
much account (pp. 341, 400), he could hardly be expected to 
surrender even to such opponents as Professor Irving Fisher and 
Bortkievicz, who deny the existence of the “technical superiority “ 
and say the third reason depends on the other two. He presses 
them hard, and it will not be easy for them to meet some of his 
arguments. ' 

Excursus xiii., the last but one of a controversial nature, 
relates to the attitude taken by Professor Cassel and Dr. Landry 
towards the author’s view of Durable Goods as concerned with 
Interest. Professor Cassel’s writings are well known in England. 
Dr. Landry is one of the few French writers who have pursued the 
same general direction as the Austrians, and he has already shown 
himself a writer of some authority.^ 

It remains to be said that the last Excursus is one of the only 
two of the long series that are old friends, viz., the Reply to Dr. 
Robert Meyer on the “Exploitation theory of Interest,” formerly 
Appendix II., now Excursus vi. (the last of Part I,), and the note 

* Hia chief writings are UlntMt du capital (Giard, Paris), 1904 ; UutiliU Bociah 
de la propri4t4 individuelle, 1901. 

No. 90. — VOL. XXIII. S 


Oil “the Amount of the Initial Fund nqdesaary for entrance on a 
pi^iod of production of definite leng^i/* formerly Appendix I. 
now Excursus xiv,, and last of the wole series. 

The book is a remarkable acWevement even for Professor 
Bohm Bawerk. The addition to text of Dissertations on such 
a large scale is probably new in/ economic literature, though not 
completely unknown elsewhere/ There are 652 pages of text and 
473 pages of Excursus, “a/'book within a book“ (434). The 
Excursus are the most piqi/ant and novel feature. Such appen- 
dices as those of Professor 'Marshall’ s “Principles “ play a different 
r6le. It may be doubted if the example of the Austrian professor 
will have many imitators; few, indeed, could follow his example 
with much prospect of finding readers. “The book requires a 
strong swimmer.” But it will be read widely and prized highly 
by all serious p.cudents of economic theory. 

James Bonar 

Elementary Principles of Economics. By Ibving Fisher, Pro- 
fessor of Political Economy in Yale University. (New 
, York: The Macmillan Co. 1912. Pp. xvi + 614.) 

‘ Professor Fisher does not give us in this book any fresh 
matter. Almost everything it contains has appeared before in 
one or other of his previous works — Nature of Capital and 
Income y Theory of Value and Prices, Purchasing Power of 
Money, and Rate of Interest. The present volume is little more 
than a combination of the more elementary parts of those books. 
This description might suggest a shapeless piece of work without 
coherence or unity of purpose. But the book is not in the least 
like this. It forms a perfectly organic whole ; and it is remark- 
able how naturally and easily the various parts fall into their 
places as integral portions of a large scheme of economic analysis. 
It would seem that Professor Fisher has for many years had this 
general scheme in his mind, and that he has always conceived 
his other works essentially as developments of its definitely 
related parts. Certainly the book is entirely free from the 
ordinary faults of a compendium. 

We commence, as is to be expected, with The Nature of 
Capital and Income. We are familiarised with Profeasor 
Fisher’s definitions of Wealth, Property, Capital, and Incotipe, 
and are duly introduced to the methods of “Balances” and 
“Couples,” the nature of “Interactions” and the rest. After the 
“foundation-stones” are thus laid, the transition to the next part 


is easy. A knowledge of prices has been assumed in the discus- 
sion of all the above conceptions. The determination of prices, 
therefore, next demands study; and, before individual prices, the 
general level of prices. The substance of the Purchasing Power 
of Money is accordingly expounded at considerable length. Then 
follows a brief statement of the theory of value to account for 
the determination of particular prices. Next, the problem of 
interest finds a natural entrance ; and the book is finished off 
with a rather unsatisfactory section entitled Distribution.’* 

It is only necessary to say further with regard to the matter 
of the book that Professor Fisher hardly seems to justify the 
claim he makes in the Preface to have avoided “controversial 
matter,” Many of his arguments, notably his explanation of 
Interest, acquire from compression a more rather than a less 
controversial character. And the criticisms which his works have 
encountered have generally been directed far more against the 
fundamental notions than against the elaborate developments 
which he omits from the present volume. English readers, too 
— familiar with Dr. Marshall’s celebrated explanation — will 
regret that Professor Fisher has retained his singularly weak 
account of transitions in the price-level. He commences by 
assuming without argument that an increase in the quantity of 
gold “through the equation of exchange will cause a rise in 
prices,” and then argues at length how that rise will provoke a 
further rise, then a reacting fall, and so on in a never-ending 
series ; thus showing neither how prices rise in the first instance, 
nor how ultimately that rise is sustained. liut there is. no 
purpose to be served in reopening here these old controversies : 
and further comment must bear upon the aspect of the book 
which is new, namely, its character as a whole, and its claim to 
the title of a text-book on Elementary Principles of Economics, 

In this regard Professor Fisher claims the test of experience. 
This book has had “thorough trial for two years in the class- 
rooms at Yale, under nearly a dozen different instructors.” And 
these instructors “have usually become extremely enthusiastic 
over its ‘ teachableness,’ although many of them had begun its 
use with grave misgivings.” To confront this testimony of con- 
verted- agnosticism with criticism of an a priori nature may savour 
of presumption ; so it will be well to say that the teachableness 
of the book is not in question. After all, any book by Professor 
Fisher would be teachable. The clear-cut vigour of his style 
would secure tha^, if nothing else would. And it is his style and 
not any peculiar merit of his matter or method that probably 

s 2 




accounts for the teachableness which the Yale instructors have 
discovered in the present book. Professor Fisher, indeed, 
attributes it to the fact that he has followed the ‘‘pedagogical” 
as opposed to the “historical” and the “logical” methods of 
other economists. He claims for his method the advantage of 
beginning with those topics most familiar to the students, such 
as “personal pocket-money and bank accounts, household ex- 
penses and income, the fortunes of the rich.” But whether the 
student is interested in these topics more than in those with 
which economists generally commence, whether his imagination 
is really more strongly gripped by ideas upon personal pocket- 
money and bank accounts than by the speculations of that 
“ Kobinson Crusoe economics ” for which Professor Fisher enter- 
tains such unqualified contempt is probably a question which 
would have to be answered very differently of different students, 
and otherwise than the author imagines of students as a whole. 
Professor Fisher, indeed, seems to think of all students as being 
possessed of a mathematical or even a mechanical turn of mind. 
It is always by ingenious mechanical illustrations that he seeks 
to enliven his arguments and impress them on the memory. 
Even when he comes to the solemn problem of the unequal 
distribution of wealth, it is by the conjecture that the grouping 
of men according to income could be illustrated by a bell-shaped 
figure that he thinks most powerfully to affect the imagination. 
There is no reason to believe that this is particularly good 

But besides the question of teachableness there is the question 
of the value of the matter taught. What kind of principles are 
these with which Professor Fisher would equip the student? 
How useful is the point of view which they would give him ? 
What kind of an introduction would they provide for the under- 
standing ajid study of concrete problems? In connection with 
considerations of this nature, the book appears to be open to 
serious criticism. As an instrument for understanding the most 
important social and economic questions it is extremely weak. 
Of j)olitical economy — in the literal sense of the term — the treat- 
ment of economic questions as they affect the State — ^there is 
none. The social point of view^ is entirely absent. Indeed, Pro- 
fessor Fisher’s analysis hardly lends itself to the consideration of 
the advantages or disadvantages of systems or circumstances from 
any point of view. It does not suggest possible lines of progress 
nor w^arn us off dangerous though specious policies. It does not 
facilitate in any way the tracing of cause and effect. It is only 




in the middle of the section on “Distribution,” which concludes 
the book, that we learn anything of the production of wealth, and 
that land, labour, and capital have something to do with it. And 
there is nowhere any but a purely incidental mention of 
machinery, or large-scale production, or any of the big features 
of the industrial system of the present day. And as a result 
Professor Fisher’s principles seem to have really very little to 
say to the questions of “applied economics,” for which he hopes 
they will serve as an introduction. 

But perhaps this criticism is unfair, for the author is aware 
that his book does not cover “the whole subject of economics.” 
He argues with justification that “no such ‘complete* book 
eatists, since no author is capable of writing it, and that all which 
aim to be complete lack at least half of the subject-matter here 
presented.” In so far as this book is to be regarded as supple- 
mentary to ordinary economic text-books it is highly valuable. It 
brings in a vivid way a number of hitherto isolated and largely 
neglected branches of economics under one comprehensive view. 
It is only when it is proposed to substitute this work for the 
quite different analysis which generally passes for economics that 
it is necessary to enter a protest. 

H. D. Hendbebon 

Gharakterbilder. By Gustav Schmoller. (Munich and Leipzig : 

Duncker & Humblot. 1913. Pp. viii-f302.) 

The twenty-two essays and addresses which Professor 
Schmoller h.i.s brought together in the present volume vary greatly 
in importance, and have been published or delivered at many 
different dates extending over a long period. Though the majority 
of them are products of the present century, some of the most 
im{X)rtant date from the years 1896 to 1898; one, indeed, was 
written as long ago as 1863. This last, an essay of only pp. 
on Bogumil Goltz, has no very obvious claim to inclusion in this 
collection except as a very early specimen of the author’s style ; 
we are afraid that the English reader, not already acquainted 
with Goltz’s career, will still remain in almost complete ignorance 
of his achievements and importance. The other papers deal with 
statesmen, administrators^ certain more or less representative 
leaders of trade and industry, historians, economists and social 
reformers— ‘all, with one exception, Germans. Originally produced 
in most cases as commemorative or memorial addresses or notices, 
these papers have the character of “appreciations,” though the 


note of criticism is by no means absent. Their length varies from 
50 to 2jr pages, and bears frequently little relation to the importance 
of their respective subjects. We confess to some disappointment 
on finding that the essay entitled “Was ist uns Friedrich List? ** 
is no longer than that devoted to Goltz, and that 3 pp. are deemed 
sufficient for a study of von Miquel. 

Some of the papers included in the volume are already well 
known ; the four letters on the “ Social and Economic Position 
and Importance of Bismarck ” have long been recognised as the 
most illuminating account and criticism of one part of that 
statesman’s activity, w^hilst the brilliant study of the two 
nationalist historians, Sybel and Treitschke, is an established 
classic. Of the less familiar papers now printed some, we 
imagine, are likely to be passed over rapidly by English 
readers (as, for example, those dealing with the administrators 
Althoff and Thiel, or such men of business as von Mevissen, 
Kilian Steiner, or Geibel) ; but there are others of great interest 
and value. Such are the critical account of the economic doctrines 
of Ernst Abbe and the remarkable experiment in industrial 
organisation inaugurated by him at the Zeiss optical works at 
Jena ; the masterly biographical sketch of Bumelin, who made 
himself no inconsiderable place in German history as a politician 
by the part Avhich he played in the strenuous days of ’48, as a 
statesman by the reorganisation of education in Wlirttemberg and 
the adjustment of the relations between the State and the papacy, 
and as an economist and statistician by his contributions to the" 
study of the population question ; ond the sympathetic and 
surprisingly laudatory essay (of 1907) on the personality and 
policy of Prince von Biilow. 

It is almost unnecessary to say that these papers show all the 
qualities which we have learned to associate with Professor 
Schmoller’s lectures and WTitings, and have enabled him to 
exercise so potent an influence upon economic thought, both in 
Germany and elsewhere. There is great learning and wide range 
of interest ; a critical spirit which is almost always kindly and 
based on a sympathetic understanding of the motives and aims 
even of those with whom he is at variance (this is strikingly 
shown in the essay on Friedrich Naumann) ; acutenqps of analysis, 
independence of judgment and lucidity of exposition. There is 
a power of generalisation which is always stimulating, even 
though it occasionally, as we think, leads Professor Schmoller 
astray, as when he finds (p. 96) in an alleged remark of the then 
Prince of Wales after Sedan, that he would one day avenge it, 


1913} schholleb: cha^ktbebiIiBbb 

an indication of the real nature of British feeling towards Grermany 
since 1870 ; or draws from certain criticisms levelled against the 
ConBervative Ministry which fell in 1905 the conclusion (p. 106) 
that in England ‘^even to-day half of those called to Ministerial 
office are the sons, nephews,* brothers-in-law, and sons-in-law of 
the Prime Minister ” ; or commits himself (p. 98) to the proposition 
that “historically and naturally Germany is not, and will not 
become, an * Eroberungs-staat.’ “ Finally, there is intense interest 
in present-day problems, and the conviction that it is the function 
of the economic and political historian who would be worthy of 
his name, to draw from his study of the past precepts to guide 
his countrymen in the present. 

Students of Professor Schmoller’s other writings will not be 
surprised to find that one line of thought runs through and colours 
all the essays before us. They are almost all studies of men who 
in divers ways have contributed substantially to the creation and 
organisation of that modern Germany which; in spite of some 
defects, appears to Professor Schmoller to approach as nearly as 
human nature permits to tne ideal State, and to be the most 
potent instrument yet devised for the policical and social elevation 
of mankind. Professor Schmoller ’s opinions as to the functions 
of government are too well known to need exi)osition here ; they 
are emphasised in the volume before us by the contrasting essays 
on Adam Smith and List. And as the German Empire has been 
made and shaped by Prussia, Professor Schmoller, though himself 
a South-German by origin, has for Prussia, its princes and 
bureaucracy, an almost passionate enthusiasm. It is fitting, 
therefore, that this volume should open with an address on 
Frederick William I., and that this should be followed by an 
oration on the first Emperor ; but even the commemorative char- 
acter of this latter discourse, delivered in 1897, hardly mitigates 
the surprise with which we read its final sentence : “Das feste 
Steuer der Hohenzollem wird uns fiihren, und der Segen Kaiser 
Wilhelms I. und seiner Kegierung wird auf uns ruhen.“ Professor 
Schmoller *s great admiration for Sybel and Treitschke is due in 
no small measure to their Prussophil fervour ; for him it is one" of 
the chief claims of Riimelin to political importance that in 1848-9 
he, “almost alone in South Germany,*^ recognised that the political 
future of Germany depended on the establishment of an ^imperial 
authority hereditary in the Prussian royal house (p. 161) ; the 
South German banker, Kilian Steiner, is praised not least because 
(p. 236) as “an enlightened German patriot, he favoured the 
leadership of Prussia.’’ 




The Prussian state system, based on the theory of an 
enlightened monarch, aided by a skilled and impartial bureau- 
cracy, raised above parties, keeping the war of interests within 
bounds, and ruling men, even against their own wishes, for their 
good, is for Professor Schmoller the "highest form of government. 
To no suggestion of ‘‘responsible government’’ for Germany will 
he listen : the racial, religious, economic antagonisms of parties 
render it impossible to expect anything but disaster from the 
adoption of such a system of government as prevails in the United 
Kingdom ; the dependence of ministers upon the monarch alone 
is the sole practicable method ; and those ministers can 
only be drawn from the bureaucracy, for ministers chosen from 
the ranks of men of business have seldom been successful (p. 109). 
English students will admire the candour of these judgmehts as to 
|X)litical inaptitude and the bitterness of economic controversy ; 
but when they consider them as pronounced upon a nation which 
has achieved so much in other fields, and when they reflect also 
upon the burdens both of tariffs and armaments which have been 
brought upon Germany, and in no small measure upon Europe 
also, by the Prussian policy of the last half-century, they may 
doubt if the Prussian system really merits all the praise 
which Professor Schmoller and those who think wdth him have 
lavished upon it, and if neo-mercantilism has really been of service 
to humanity. 

In the preface to the volume before us Professor Schmoller 
explains that, now approaching the completion of his seventy- 
fifth year, he has felt compelled to give up some part of his 
university activities, in order to devote his strength and time, 
so far as may be, to literary work. It may then nor be out of 
place to express here the hope that he may be long spared to give 
to Germany and the world the fruits of his great learning and 
wide experience, and to enjoy the respect and regard in which 
he is held by all economic students, both those who know him 
only by his books and those who have had the added advantage 
of immediate acquaintance, however slight, with a strong and 
gracious personality. 

Peboy Ashley 

Industrial Evolution in India. By Alfred Chatterton, C.I.E., 

Special Adviser for Industries and Commerce in Mysore. 

(Madras : The ‘‘Hindu Office. Ks. 3.) 

In this volume Mr. Chatterton, who has himself done excel- 
lent wwk in Southern India, especially in encouraging indi- 


genous industries, republishes a number of papers and articles 
written by him from time to time on the subject. His views 
are valuable, both because they are founded upon careful study 
of existing conditions and on practical experiments entered upon 
with a view to improving the methods employed, and because he 
takes a broad view of his subject and discusses it with due regard 
to the circumstances of the poorer classes of workers, not onljr 
in the towns but in the villages. He gives a detailed account of^ 
such branches of industry as chrome tanning, hand-loom weaving, 
w^ood distillation, milk products, and well irrigation, and describes 
the methods in w^hich those industries have hitherto been carried 
on, and the endeavours made to increase the efiSciency of the 
labour employed upon them , which have in several caocs met with 
considerable success. 

The most interesting part of the book is that in which he 
states his general conclusions as to the present needs of India 
in the matter of industrial deveioj)ment. He points out that all 
the mills, workshops, and factories in the country, which are 
worked on modern lines, only employ about one million people; 
and that while it would no doubt be advantageous to increase the 
number of factories worked on a large scale, what India chiefly 
requires is such improvements in the traditional methods employed 
by small men working independently or in small bodies as will 
be within their reach, and will enable them to compete with 
manufactures imported from the more highly-developed industrial 
communities of the West, without necessarily leaving their homes 
and congregating in large towns. 

In this connection he discusses the probable effect of a tariff' 
imposed for the protection of infant industries, and it is inter- 
esting to find that, unlike most economic thinkers who have 
approached the question from the Indian point of view, he has 
arrived at the conclusion that such a protective tariff would not 
be to the advantage of India. His arguments on this subject 
were chiefly addressed to the educated classes in India, to whom 
he pointed out that, while the imposition of protective duties on 
manufactures would no doubt encourage the development of 
factories in India, and thus increase the amount of employment 
given on the factory system to workmen and subordinate clerks, 
it is probable that it would lead to the establishment in India 
of enterprises financed by capital from abroad, in which all the 
important posts would be monopolised by highly trained technical 
experts, also imported fi’om abroad ; so that, while such a policy 
would increase the cost of manufactured goods to the Indian 


consumer, it would hot be likely to make any large addition to 
the openings for employment of indigenous capital and indi- 
genous talent. He therefore advises the educated classes of India 
to give up hopes of seeing a protective tariff imposed, and to 
devote themselves to improving their own technical knowledge 
and to urging Indian capitalists to finance such industries as 
promise to be profitable under a system of free trade, and 
especially those which will afford occupation to small men or 
small bodies of workers. 

He dwells with much force on the one-sided character of the 
education which has hitherto been provided for Indian students, 
and urges that it should be made less literary and more practical 
than hitherto. He advocates hand and eye training, a cultiva- 
tion of the powers of observation, and the co-ordination of the 
various faculties in the service of their possessor, as opposed to 
the mere development of the mental powers along comparatively 
narrow lines, and holds that the aim of Government in the matter 
should be to train the youth of the country, first in schools and 
colleges, and then in workshops and laboratories, and finally, to 
start them in life, giving them practical work to do under com- 
petent supervision until they get accustomed to the new atmo- 
sphere and surroundings, and are able to launch forth by them- 
selves. It is satisfactory to see that an educational policy of 
this character is gaining favour in India, and that the responsible 
authorities are already moving in this direction. 

Mr. Chatterton gives some examples which go tc show that 
the Indian workman is ready to adopt new and improved methods, 
when he is satisfied that they will enable him, by the employ- 
ment of means within his reach, to increase his net out-turn, or 
render his labour more efficient. The grower of sugar-cane has 
in most parts of India discarded the old wooden mills in favour 
of those made of cast-iron, with the result that the work is done 
with less labour, and a higher percentage of juice is extracted. 
In many places the weavers have recognised the advantage of 
subdivision of labour so far as to prepare their warps in bulk on 
rotary mills. In others, again, the fly-shuttle loom has been 
substituted for the native hand-loom, with the result that the 
speed of weaving has been doubled; wood and metal workers 
almost invariably use some tools of European manufacture, and 
sewing-machines are now to be found in almost every tailor's 
shop. Mr. Chatterton himself has given special attention to the 
problems of tanning, weaving, and irrigation from wells as con- 
ducted by men with small means, and has introduced improved 


methods, which are being gradually adopted in Southern India. 
As he truly says, one of the great problems which India offers to 
the civilised world is the application of the resources of science, 
engineering, and commercial experience to an attempt to raise the 
worker, and pit his skill, ingenuity and adaptability against the 
large factory and the organised trust, with whose products he has 
to compete ; in short, to develop the function of the man rather 
than the power of the machine. There is work on these lines in 
India for many Chattertons. 

J. Wilson 

The Cotton Manufacturing Industry of the United States, By 
Melvin T. Copeland, Ph.D. Harvard Economic Studies, 
Vol. viii. (Cambridge, U.S.A. : Harvard University. 1912. 
8vo. Pp. xii4-415. Price $2 net.) 

This volume, by the Instructor in Commercial Organisation 
in Harvard University, was awarded the David A. Wells prize 
for 1911-12. It gives a succinct history of the cotton and knitted 
goods industries of the United States, an account of their present 
position and organisation, and a comparison of them with the 
cotton industries of other countries. The history of wages has 
been omitted ‘‘because of the vast amount of time that would be 
required to secure the data on which to base any reliable con- 
clusions,’’ and no attempt has been made to compare the cost of 
living in different countries. These omissions are regrettable but 
intelligible. A table is given on p. 130 showing that the rate of 
wages for weaving regular print cloth in Pall Piver discloses little 
advance between 1884 and 1908, and the author might well have 
supplemented it by a summary of the information, incomplete 
though it is, that is given in the Census volumes. This is almost 
the only complaint which one feels inclined to make about this 
valuable book, which is of equal interest to the cotton trade in 
the United Kingdom and to the professed student of economics. 
Not only does it give a very thorough description of the competi- 
tive power of the American industry, but it throws light on some 
important economic problems. 

In 1860 there were 1,091 establishments in the United States 
engaged in cotton manufacture, employing 5,200,000 spindles and 
122,028 persons, and producing an output valued at 116,700,000 
dollars; in 1910 there were 1,208 establishments with 27,400,000 
spindles and 371,120 employees, and the value of the output was 
616,500,000 dollars. Measured by spindles, the United States 


are now the second cotton-manufacturing country ; measured by 
weight of raw cotton used, they are the first, for in 1905, with less 
than half the number of spindles owned in the United Kingdom, 
they consumed 13 per cent, more cotton. ‘^This is explained by 
the larger production of fine yarn in England and the more exten- 
sive use of the mule, on which the output per spindle is about 
two-thirds of that on the ring frame.” The ring spindle was 
invented by an American in 1831 * and in 1870 the number of 
ring spindles in use in the States slightly exceeded the number of 
mule spindles ; in 1905 there were more than three times as many 
ring spindles as mule spindles in operation. In England, in 1909, 
there were five times as many mule spindles as ring spindles. 
The explanation of this divergent development lies mainly in the 
fact that no skilled class of operatives grew up round the cotton 
mills of America, which were regarded only “as a convenient 
place whence to get. a start in life.” The supply of skilled immi- 
grants was insufficient, and consequently the success of the trade 
depended on adapting machinery to the use of the unskilled 
immigrant, and especially of women and children. Such a 
machine is the ring frame, which requires little experience 
and skill, and, with its greater output per operative, secures a 
reduction of labour cost. In the United States, labour cost is 
dominant and every effort is made to lessen it ; in the United 
Kingdom, to save in raw material is the important thing. This 
distinction runs through every dej)artment of the industry. In 
the preparatory machinery all the imi)rovements are British, 
because British manufacturers have felt the necessity of economis- 
ing in raw^ material , as the competition of other countries forced 
them more to fine spinning. The use of the ring spindle does not 
grow quickly in England because the short-stapled cotton used in 
spinning low counts in that country would not stand the strain of 
the ring frame. Further, ring weft yarn must be spun on bobbins 
and not on cops, and the freight charges on the former from 
spinning-mill to weaving-shed wwild increase expenses. In the 
United States the yarn is usually spun and woven in the same 
mill, and, says Dr. Copeland, in the States “the combination of 
spinning with weaving is as much a result as a cause of the 
preference for the ring spindle.” 

The same pressure of labour cost has led to the extensive use 
of the Northrop loom (invented by an Englishman) in the States. 
Apart from the facts that the mule cop is not so well adapted as 
the ring-frame bobbin for use with that loom, and that to scrap 
iPacbinery is always costly. Dr. Copeland thinks that “its use 


will probably be more limited in England than in the United 
States. . . . The loom has been adapted but gradually to the 
weaving of fine goods, and even now many of the fine goods 
manufactured in England could not be woven advantageously on 
the Northrop loom. Thus, there is a considerable field in 
England which it cannot reach, a field which is not only abso- 
lutely, but relatively, larger than in the United States. In spite 
of the advance in the production of finer cotton cloth in this 
country, the bulk of our output is still the coarse and medium 
grades of plain goods.” 

Dr. Copeland is very emphatic that the growth of the cotton 
and cotton-knitted goods trades is mainly due, not to the tariff, ** 
but to American inventive genius stimulated by the compulsion 
to keep down labour costs. 

The advantages of large-scale production appeal to be fully 
obtained in America by a plant of 50,000 to 75,000 spindles and 
one to two thousand looms. As the trade has grown the product 
has become more diversified and the mills more specialised. A 
few companies have mills with from 100,000 to 650,000 spindles, 
but these are really combinations of several mills and are divided 
into independent departments. Association and amalgamation of 
companies have not been successful in spinning and weaving, 
because all the possible economies of production are realised at 
an early stage. This fact supports the theoretical view that there 
is a limit to the growth of the business unit. Its importance 
must not be over-strained, however, for the typical modern Lanca- 
shire mill has about 80,000 spindles. Moreover, the theory has 
always been expressed too narrowly, for it is confined to produc- 
tion, whereas the great economies of amalgamation lie in the 
sphere of distribution, partly directly through economies in selling 
expenses and partly indirectly through elimination of the waste 
of competition. These influences manifest themselves in America 
through the increasing association of manufacturing and selling 
houses, a development which proceeds indifferently from both 
ends. The community of interest among New England cotton 
manufacturers is another important factor in the restriction of 
competition. It operates through mutual stock-holdings, and 
especially through the interests which selling houses, who finance 
important sections of the trade, have in manufacturing firms. 

The organisation of the American cloth market in its early 
years took the form of auction sales. This was the method by 
which imported goods were disposed of, and, as the import trade 
declined under the influence of the early tariffs, merchants turned 


their attention to financing the new cotton industry and the 
"current method of sale was naturally adopted. As the country 
became more settled and transport and banking systems more 
developed, sales through houses selling on commission, and, later, 
sales direct to large customers, have become more characteristic 
of the business. In 1851 about 7,500,000 dollars’ worth of dry 
goods, two-thirds foreign and one-third domestic, were disposed 
of by auction, and it is significant of the youth of American 
business development that as late as 1897 there w^ere large public 
sales of surplus stocks. One important function of the selling 
house has been the financing of the trade by granting long credits 
to customers, a function which is still of importance in the 
marketing of the products of southern mills, whose live capital 
is seldom adequate. For most of the New England manufac- 
turers, however, it is no longer necessary to obtain financial aid 
either through advance of money or endorsement of notes. The 
urgency of keeping down labour costs compels the mills to run 
on large orders; as a rule, no order for less than 2,000 yards is 
accepted, and some mills insist on orders of 6,000 or 10,000 yards 
of a single design. This factor in production has the result of 
making the selling house more necessary in distribution. The 
most modern agent in distribution is the merchant purchaser of 
grey goods who has them bleached, printed, &c., to his order, 
and his prominence has been of late becoming more evident. The 
market is becoming more settled and at the same, time more 
diversified, and corresjx)nding to these changes the American 
organisation is approximating to the English so as to adjust the 
growing volume of trade more closely and speedily to the varying 

Asia is the largest market for American cottons, especially 
Manchuria, which imports almost exclusively cheap drills and 
sheeting for making padded garments. Canada is a more stable 
market, for which the United States has an advantage of position 
despite the tariff. In South and Central America English and 
Germans have established close commercial relations by means of 
steamship lines, banking houses, and other mercantile connec- 
tions, and consequently special efforts will require to be made if 
the export trade of the United States cotton industry is to develop 
largely. The United States import trade is mainly in lace and 
fine goods, and has grown despite increasing attempts to restrict 
it by heavy duties. The whole of the chapter on import duties is 
worth reading, but there is only space to quote the author’s con- 
clusion : “If the manufacturers were willing to give up some of 


this useless ‘ protectibn * and seek a reduction in the duties on 
their supplies, they would strengthen their competitive position. 
Machinery, which is protected by a forty-five per cent, duty, costs 
more in America. . . . The duties on dye-stuffs and other minor 
requisites are also handicaps to the American cotton manufacturer 
in his competition for a foreign market.” 

Only a brief reference can be made to the great development 
of the cotton industry in the Southern States from 561,000 
spindles in 1880 to about llj millions in 1910. Though this is 
partly due to savings in freight, power, and taxes, “the corner- 
stone of the structure has been the supply of cheap and tractable 
labour.” This local supply of labour has been exhausted, with 
the result that wages have risen, while at the same time the 
publicity that has been given to the deplorable extent to which 
child-labour was employed has led to some efforts at restriction 
and to some attempts to improve social conditions. The com- 
petition of the South in coarse goods was severely felt , especially 
during the depression of 1893-7, and the New England manu- 
facturers were to some extent forced to the manufacture of fine 
goods. The advantages of the North, however, in capital and 
credit facilities, in proximity to markets, in experience, and in 
climate, have in the long run outweighed the temporary advan- 
tage of cheap labour. It has been predicted that the North would 
be restricted to the manufacture of fine goods and the South to 
coarse goods, but “it is by no means certain that this will be the 
ultimate outcome. On the one hand the production of coarse 
goods shows no sign of diminishing in the North, and on the other 
hand several fine goods mills have been erected in the South. 
Furthermore there may grow up in the South a permanent class 
of operatives who will develop especial skill in the manipulation 
of cotton while the inundation of foreign immigrants continues 
in New England. The one prediction is as good as the other.” 

The last 120 pages of the book deal with the position of the 
United States compared with that of the other leading cotton- 
manufacturing countries, but they are so packed with information 
that they defy further condensation. These, and several other 
excellent chapters which have to be passed over very cursorily, 
the student must study himself, but he will do himself wrong if 
he passes over a single page of this excellent book without careful 

Henry W. Macrosty 




Intorno al concetto di Reddito hnponibile e di un sistema 

d'imposte sul reddito consumato. By Luigi Einaudi. 

Pp. viii-f 105. (Torino : Vincenzo Bona. 1912.) 

SiGNOB Einaudi’s important work takes as its starting-point 
the familiar distinction between income received and income con- 
sumed. Income received is the addition which accrues to a 
man’s possessions during the course of a given period of time; 
income consumed is this addition minus such part of the accretion 
as is added to capital either in the form of machines or of personal 
capacity. From this familiar distinction he proceeds to the no 
less familiar thesis that a fax on income received implies double 
taxation of that part of income which is saved, and that, if every 
pound of income is to bear an equal burden, taxation must be 
confined to income consumed. Hence, the practical inquiry, By 
what sort of fiscal, arrangement can this state of things be brought 

To ascertain directly the amount of income consumed for 
purposes of taxation is impracticable owing to the facility with 
which evasion can be. practised. Consequently, resort must be 
had to one or other of the two following expedients, namely : 
(1) the taxation of the material goods and personal services on 
which a man spends that portion of his income which he elects to 
consume ; and (2) the exemption from taxation of such portion of 
income received as a man is presumed to save. Of these two 
expedients the former is confronted with difficulties of application, 
the latter with a diflSculfcy of principle. It is plain that, if an 
equal rate of taxation were imposed upon all “consumables,*’ the 
whole of income consumed would be taxed once at the rate 
selected. But the adoption of such a policy would necessitate an 
amount of State inspection over domestic and business arrange- 
ments that would be not only intolerably irritating, but also 
immensely expensive. It is essential, therefore, that taxation be 
confined to forms of expenditure which can be discovered with 
reasonable ease, such as expenditure on house-room or servants, or 
on commodities that necessarily pass rough a few ports 
where Customs officers can be ix)8ted, or on commodities that 
are mainly manufactured in large establishments susceptible to 
supervision by excise officers. This necessity would not, of 
course, prevent the taxation of consumables from serving as a 
means to the equal taxation of all income consumed, if everybody 
was accustomed to consume different goods in the same proportion. 
Since, however, no custom of this kind exists, it follows that 


the taxution of consumables^ taken by itself > cannot provide a 
systeni conformable to the postulate of equality.*’ Nor is this 
all. Up to this point it has been tacitly assumed that all 
saving takes the form of external objects. Signor Einaudi now 
shows, however, that, besides investment in things, there exists 
also investment in people. To satisfy the postulate of equality, 
the latter as well as the former must be exempted from taxation. 
But investment in people includes whatever part of expenditure 
on house-room, personal services, food, clothing, and so on, goes 
to build up the productive powers of men, and, more especially, 
of their children. To separate in any exact way this form of 
expenditure from expenditure on consumables that are not capital 
goods is impossible; for the same commodity, according to the 
circumstances in which, and the persons by whom, it is consumed, 
sometimes is, and sometimes is not, a capital good. The best w’^e 
can do is to lay down a rough approximate rule -to the effect that 
those goods and services should be specially selected for taxation 
on which is spent income left over after the satisfaction of vital 
needs. Even yet, however, there remains a final difiSculty in 
the way of accepting a system of taxation of consumables as the 
right practical sequence to the postulate of equality. This diffi- 
culty arises out of the fact that, after a point, increase in the rate 
of tax levied upon any commodity jdelds a diminishing and not 
an increasing revenue. Consequently, this system may i>rove 
incapable of providing the State with the money that it 
needs, and it becomes essential to combine it with some other 

The alternative expedient referred to at the beginning of the 
preceding paragraph was the taxation of income received — 
in the manipulation of which the convenient device of the 
levy at source can be employed — coupled with the exemption 
of such portion of this income as is presumed to be saved. The 
limit above which this exemption is made will, of course, 
be different for different classes of persons, for those with large 
families and those with small families, for those with incomes 
derived from their own work and those with incomes from 
investments, and so on. The exemption, however, must in 
every case, for practical reasons, refer to classes and not to indi- 
viduals. Herein is the difficulty of principle, referred to above, 
with which this expedient is confronted ; for the amount of saving 
which is presumed in respect of any class necessarily refers to 
the average member of that class, and is, therefore, necessarily 
erroneous in respect of those members — and they will be numerous 
No. 90. — VOL. XXIII T 


—whose savings are greater or less than the average savings of 
the class. 

From what has been said it is sufiBciently obvious that neither 
the expedient of taxing consumables nor that of taxing income 
received, with exemptions for presumed savings, nor any com- 
bination of the two, can provide a system wholly in conformity 
with the “postulate of equality.” Nevertheless, Signor Einaudi 
shows that not only is it possible in practice to advance a consider- 
able distance towards such a system, but that this is actually done, 
not consciously, perhaps, but none the less effectively, in many 
parts of the fiscal machinery that is actually in operation in 
modern States. Thus, a step towards the required system is 
taken whenever a higher rate of taxation is imposed upon unearned 
than upon earned incomes, for, other things being equal, the 
possession of an earned income may be presumed to render larger 
savings necessary' than the possession of an equal income that is 
unearned (that is to say, derived from investments). A like step 
is taken when a general income tax is associated with a special tax 
on property, whether levied annually or on occasions upon which, 
owing to the death of the owner or for other reasons, the property 
changes hands. This system, like the preceding, implies that, of 
two persons with equal incomes, that one who needs to save more 
will, in general, be taxed more lightly than the other. It is 
evident that Signor Einaudi looks with approval upon these and 
other similar devices. 

What has been said will suffice to give a general idea of the 
contents of this interesting volume. The author on the last page 
pleads for a criticism directed to the question whether the structure 
he has built up is rightly based on the postulate of equality, 
rather than for one directed to this postulate itself. For my 
own part, however, I am unwilling to follow the line thus laid 
down. The conclusion which Signor Einaudi draws from his 
premises I believe to be correctly drawn. But the device of 
setting up the postulate of equality without discussion and basing 
upon it an elaborate discussion, is calculated seriously to mislead 
opinion. This “postulate of equality” in Signor Einaudi’s sense, 
namely, that every pound of income ought to bear an equal burden 
of taxation, is obviously not given in intuition. It can, therefore, 
only be defended either as a derivative from some more funda- 
mental maxim concerning equity between persons or on the ground 
that to act upon it makes for maximum satisfaction. The deriva* 
tion “equity ” Signor Einaudi does not attempt to establish ; 
nor does it seem to me possible that, had he done so, the attempt 


could have succeeded. It is, however, plausible to maiutain, and 
has, in fact, been maintained by many writers, that equal taxation 
of every pound of income ultimately maximises satisfaction, be- 
cause it does not interfere with the natural distribution of income 
between the rival uses of saving and spending. Signor Einaudi 
himself makes use of an argument of this kind in reference to 
the ^xation of undeveloped building land. But — and this is my 
fundamental criticism — his postulate of equality, when he comes 
to apply it to practice, slides away from the meaning that every 
pound of income ought to be taxed equally, to the quite dilferent 
meaning that all income-owners ought to be taxed in proportion 
to their incomes. Both these propositions lead logically to the 
concentration of taxation upon actual consumption and the 
exemption of actual savings. But only the second of them leads 
to the taxation of presumed expenditure and the exemption of 
presumed savings. The former of them in nO way justifies this 
arrangement, for the reason that the exemption of presumed 
savings does noL hinder an income tax from differentiating against 
pounds that are in fact saved as compared with pounds that are 
in fact consumed. When, at the margin, a man is debating 
whether to invest or to consume another pound, it will still be 
the fact that if he consumes it, he will be taxed on it once, and, 
if he invests it, twice. The distribution which he makes of his 
resources between the two uses will, therefore, be the same if 
presumed savings are exempted as it would be if nothing was 
exempted. Thus, it appears to me that Signor Einaudi, in his 
postulate of equality, has confused two propositions of which the 
former alone is sufiSciently plausible to warrant an attempt to 
build a theory of taxation upon it. His volume, interesting as 
it is, would have gained in v^ilue if more care had been bestowed 
on the foundations. 

A. C. PiGOU 

Industrial Combinations and Trusts. Edited by William S. 

Stevens, Ph.D., Columbia University. (New York: The 

Macmillan Company. Price 8^?. 6d.) 

This book is a collection of original documents on the origin, 
policy, and control of Trusts and similar organisations ; and it is 
invaluable to students of this side of economic development. 
Though the author has simply published his authorities in their 
order, the classification and arrangement are so admirable that 
^the book is really an impartial treatment of the Trust problem. 

264 TH!is ledoi^oino jodbnal {tone 

One could wish that a similar service <iould be rendered us in 
regard to the Kartels. The agreements which created the driginal 
Trusts in oil and sugar, the decisions which upset that method, 
and the transformation of the Oil Trust into a Holding Company 
can be read as a consecutive history in the early chapters, and in 
so short a space as to define easily for the student who comes to 
the question for the first time the precise steps in this interesting 
history. Perhaps the most important chapter in the book is that 
on “Methods of competition and restraint of trade.” These 
methods, as the author remarks, raise the vital question of the 
“normality” of Trusts. It is his own theory that “the advan- 
tages of combination are to be found chiefly in certain methods, 
and not in the frequently alleged economies of saving of cross 
freights, &c. It is a very serious question whether, should certain 
practices be prevented, the alleged natural tendency to combina- 
tion would not vanish into thin air.” For this reason, he devotes 
a very long chapter to the tactics and strategy of industrial 
warfare, and it is fascinating reading. Besides the boycott and 
the buying out of rivals, there are the methods of the “little 
yellow dog,” or bogus indej)endent, company, in great variety; 
the extract on pp. 326-7 is not without its humour : “If I was 
not able to regain the (local) trade, 1 was to whistle by writing a 
letter, and they would then send on a little yellow dog . . . known 
as the Climax Manufacturing Company. ... So we didn’t have 
to lower our firices to the adjoining trade, but the yellow dog got 
the business.” Then there is the organisation of the “Competi- 
tion Department,” at other times the “Ways and Means Depart- 
ment,” with its special force of inspectors of other people’s 
business, known as the “knock-out men,” in many oases obtain- 
ing their information regarding the trade of outsiders by payments 
to railway officials. Here is a message from headquarters to a 
“knock-out” man: “Keport received, and is satisfactory for a 
beginner. Try to be more acci|Eite in the information in future, 
and have report include in full (1) dates when cars arrive, (2) 
whether box or tank cars, (3) all letters and numbers on cars, (4) 
contents of cars.” And wffiat is to be said of this? — “The 
defendant . . . caused to be maintained at the factory a display 
room known as the ‘ graveyard.’ In this room were shown 
(details) of competing companies which had been forced out of 
business by the methods above set out. Prominent display cards 
reporting the names of these companies, the date when they went 
out of business, and the amount of money lost by them, appeared 
prominently in the exhibit. . . . This process of intimidating 


manufacturers (purposing to go into the business) was known as 
the ‘ glooming ’ process, and the room was sometimes known as 
the ‘glooming* room” (p. 366), The “Gary dinners’* offer an 
ingenious argument on the question when an agreement is not 
really an agreement. 

I do not think it is shown that Trusts owe their existence to 
such methods, which imply, in fact, both that the combination is 
already strong enough to use them, and that the attack of the 
outsider is a constant feature of the history of Trusts. The detail 
of organisation is one of the striking asi>ects of American life as 
a whole ; and inevitably it has found its way into industrial com- 
petition. Except for bribery and definitely illegal practices, these 
are instances of competition made quite efficient: a’^d they show 
the immense difficulty of deciding on the morality of business 
methods by the use of standards that are purely economic. They 
show too that, whatever Trusts have done, they have not 
exterminated competition, but rather displayed its possibilities. 

D. H. Macoregob 

An Encyclopcedia of Indusirialism. (London : Nelson and Sons. 
Price Is.) 

This is a short volume of reference on the chief problems of 
Labour and Employment. Most of the articles offer a historical 
summary of their subjects, an analysis of existing conditions, 
and an indication of the best sources of information. In some 
cases there is also given a useful comj^arison of English and 
foreign results. The work is in the hands of ex])eri8 ; the article 
on “ Wages *’ is by Mr. Bowley , on “ Strikes “ by Professor Nichol- 
son, on “Labour and Politics” by Mr. Philip Snowden, on “Co- 
partnership” by Mr. Vivian, on “Employers’ Unions” by Sir 
Hugh Bell. Out of the usual run of articles on these subjects is a 
most interesting statement by Mr. Frank Nasmith of the con- 
ditions of “Factory Management.” The book should be of special 
value to Workmen’s classes and study circles, and to academic 
students for its useful bibliography of official documents on the 
social question. L- H. Macoregob 

Prohleme der W eltwirthschaft : Kanada, Volkswirthschaftliche 
Grundlagen und W elimrtJischaftUchc Bcziehungen. By 
Dr. Anton A. Fleck. (Jena : Gustav Fischer. 1912. Pp. 
xiv + 367.) 

This handsome quarto volume forms the tenth of a series of 
monographs issued under the editorship of Professor Dr. Harms 




by the Institul fur Seeverkehr and Weltwirthgchaft at the Uni- 
versity of Kiel. The previous numbers deal with the position of 
the sailing-ship in international trade, the iron-ore supply of 
Europe, Denmark, tobacco cultivation in the Dutch Indies, the 
economic life of primitive peoples, national trade and world trade, 
Japanese industry, Emden and the Dortmund-Ems canal, the 
sliding scale for corn duties. The list is an excellent one, and 
the titles of the forthcoming parts are no less attractive. The 
present volume first sketches the chief features of the physical 
structure of Canada and the main lines of the historical and 
political develo2)ment of the country. The policy of the Grovern- 
ment in dealing with the land and with emigration is next dis- 
cussed, in order to complete the description of the social basis of 
the economic life of the Dominion. About one-half of the book 
is then occupied wdth a detailed description of agriculture, 
forestry, fishery, industry, and transix)rt, incorporating all the 
available statistics. If, as the author says, Canada has not been 
fully discussed in the economic literature of Germany, his book 
should fill up the gap in a most admirable fashion. Indeed, there 
can be few^ volumes as comprehensive in the abounding supjdy of 
English books on Canada. The only serious defect is the want of 
a number of small sketch-maps in the text, for the large official 
map which is supplied with the book is not very handy for use 
by the reader. 

The last third of the book deals with the economic relations 
of the Dominion to the rest of the w^orld, and in particular to the 
United Kingdom and to the United States. The author holds that 
Canada is economically dependent on the United States, and that 
this dependence must be increased by the need of the States for 
Canadian foodstuffs and raw materials, whether these are obtained 
by means of a reciprocity treaty or a one-sided reduction of 
import duties, for the States would pay for those imports by an 
increased exportation of manufactured or semi-manufactured 
goods. As Canada earnestly seeks to enter into economic relations 
with the wdiole world, and has no intention of limiting her manu- 
facturing activity, Dr. Fleck points out that the combination of 
these different factors must lead to a greater intensification and 
complication of the trade-exchange between the Dominions and 
the States. Finally, he adds, “The danger of a complete absorp- 
tion of the Canadian State, with its small population, in the 
powerful economic unit of the United States, with a population 
which will soon number a hundred million inhabitants, will 
always be a warning for Canada not to allow economic fusion to 


pass beyond a definite limit. The political feeling of independ- 
ence is developed to a high degree in Canada, as its whole 
economic and political history shows. For the preservation of 
political independence power is necessary, and as Canada will not 
possess this for any period that we need consider, the centre of 
gravity of Canadian policy must always gravitate more to London 
than to Washington.*’ 

Henry W. Macrosty 

Die Konzentration im SeeschiffahrisgeweTbe, By Dr. Paul 
Lbnz. (Jena : Gustav Fischer. 1913. Pp. viii + 142. Price 
m. 4.) 

It is more than ten years since the formation of the Inter- 
national Mercantile Marine Company under the auspices of the 
late Mr. J. P. Morgan. The absorption of the White Star Line 
in this American Trust caused a feeling almos’t of dismay in this 
country, and made everybody aware of the existence of combina- 
tions in the shipping industry. For several years little was heard 
about them, although the question of shipping rings and deferred 
rebates attracted some notice. During the last two or three years 
much public attention has again been drawn to the subject, partly 
owing to the numerous acquisitions of the Royal Mail Steam 
Packet Company, and partly owing to the rumours concerning 
the intentions of the P. and 0, (Company. 

The reviewer took up Dr. Ijenz’s book in the anticipation of 
finding a critical account and explanation of the renewed move- 
ment in favour of combinations in the shipping industry, only 
to be disappointed. It contains merely a brief reference to the 
latest developments; all the essential material for the writing 
of the book existed in 1909, when the Report of the Royal Com- 
mission on Shipping Rings was published. Dr. Lenz has 
collected practically no new facts concerning shipping combina- 
tions. On the basis of published material, he investigates, from 
a theoretical rather than from a historical staridjK>int, the causes, 
extent and effects of combination in the shipping industry. The 
various forms which combination may take, c.g., amalgamation, 
the purchase by one company of the majority of shares in another 
company, pools and conferences, are carefully described, but the 
book is a descriptive study only in a secondary degree ; primarily 
it is an analysis of the organisation of the shipping industry. 

In more than one case, Dr. Lenz’s desire to be strictly 
scientific in his treatment of the subject has led to the introduc- 


ram BcoKowc joubhajj [smn 

tioi^ of matter,, which^ a.ppears to be somewhat superfluous iu a 
short book ; e.g., the author might have stated his defluition of a 
cartel, without devoting four pages to discussing the definitions 
of various authorities ; again, he might have classified shipping 
combinations on his own system, without allotting two pages to 
criticising the systems of classification of other writers. 

Douglas Knoop 

Lc Banche e il Mercato Moneiario, By Marco Fanno, (Eome : 

AthensQiim. Pp. 394.) 

Mr. Marco Fanno, after having written valuable articles in 
the Bevista Ligure on the development of the issue banks 
(L'cvoluzione delle Banche d*Emissione) has now published, in 
book form, his ideas and the result of his studies concerning this 
important question. Well aware how intimately the position of 
the issue banks and other banks is connected with the situation 
of the money market, he has, in the second part of his book, 
devoted special attention to this market, which, as he rightly 
explains, becomes more international and more important every 

What Mr. Marco Fanno writes further concerning the 
development of banking and the services that are rendered by 
the banks in charge of the issue of bank notes is, of course, not 
unknown to those who have made a special study of these 
questions, but he deserves a word of praise for the clear and 
comprehensive way in which he treats the different arguments 
that plead in favour of one single issue bank or of many issue 
banks. However, whether there be in a country one or more 
issue banks entrusted with the issue of the fiduciary circulation, 
it is imperative that such banks, representing, so to say, the 
credit of the nation, should always apply the principles of sound 
finance and limit their transactions to such as are permissible to 
a bank of issue. Unfortunately, the financial history of several 
countries proves that their issue banks have not always confined 
themselves to their true mission, but have engaged themselves in 
transactions involving the loss of many millions, while others 
have had to suspend payment, showing that the fiduciary circula- 
tion of a country is a matter of the highest importance, and 
which cannot be disturbed with impunity. When issue banks 
are in danger the consequences and ensuing confusion in business 
are such that the intervention of the State has always been, and 
always will be, indispensable to alleviate the evils of a most 
dangerous situation. 

1913] pbhtbb: die aBbexts oenosiSeksohaftbk italibns 2IB9 

After having dealt with the issue banks, Mr. Fannb gives 
interesting partidulars concerning the development of banking in 
general, and the great extension which the leading European 
banks have given to their sphere of action by increasing their 
capital in order to take over the small country banks, and by 
creating numerous branches, especially in the industrial towns. 
His figures concerning the increase of capital of several foreign 
banks are, however, not entirely “up to date.“ They do not go 
further than the year 1907, w^hile it is well known that since 
then, and especially during the last three years, many banks 
have increased their capital considerably and created many new 
branches. But what he says concerning the manner in which 
the German and other Continental banks are working is worth 

Altogether Mr. Fanno’s book contains many interesting 
chapters, and will be of great use to those who want to studv the 
development of banking and the situation of the international 
money market, which is so closely connected with the discount 
and gold policy of the issue banks and with the balance of trade 
and balance of payment of the different nations. 

C. Eozbnraad 

Die Arbeits- und Pachtgenossensehaften Italiens. By W. D. 

Prbyer, (Jena : Fischer. 1913. Pp. 228.) 

This book deals with two co-operative movements, which are 
in a sense peculiar to Italy, but which certainly possess interest 
also for non-Italians, and one of which may very well serve as a 
model to ourselves in our efforts to create a tenant peasantry. 
On these two subjects Herr Preyer’s book is unquestionably the 
fullest and best now before the public. However, the author 
considerably overshoots the mark when claiming to be the first in 
the field to deal with them. Even in the German Press, of 
whose negligence he makes a point, both subjects have been 
discussed with a fair amount of fulness something like ten years 
ago in Blatter fur Genossenschaftswesen. He is likewise wrong 
in stating that co-operative renting of land has not extended 
beyond Italy, Roumania, and some feeble beginnings in Russia. 
Not to speak of one or tw^o of our owm newly-formed Allotments 
Associations, such as the “Northern,’* and Mr. W. J. Charleton's 
“Wayford Tenants,” there are eleven flourishing common-land 
renting societies, of exactly the same type as the Roumanian, 
in Servia. Moreover, the author is woefully behindhand in his 


statistics# , Already in 1908 there were known to be about 160 
affManze collettive established, and last July the number was 
given as 160. 

It is a little difficult to see why Herr Preyer should have 
bracketed the hraccianti societies together with sindacati and 
consoTzi agrazi as specifically “ agricultural*’ societies. They 
are working-men's societies aiming, in the first instance, at self- 
employment, out of which has grown, as in the ideals of our 
Eochdale pioneers, the aim of independent settlement! upon the 
land. The braccianti — that is, the men who simply bring their 
“arms ” to their job, navvies — however, are generally and properly 
classed together with the muratori, the suolini, the biroccianti, the 
barcaiuoU, (fee., as working-men co-operators. They have made 
roads, built dykes, built even a short railway, and worked in the 
Laurium mines. Their movement began much earlier than Herr 
Preyer puts it, owing — as he rightly explains — to the cessation of 
railway construction and the like. He talks of 1905. The bracci- 
anti were busily and sturdily struggling along, conquering for their 
class a better position and better pay, and holding a large terri- 
tory at Ostia on improvement lease, in 1893. The Baccariai Act, 
which is their charter, dates from 1889. In 1894, in the Molinella 
district, they had made themselves masters of the situation. 

These men were throwm out of work, as has been stated. 
Although in after time they have displayed considerable capacity 
for striking — for which they were cruelly punished in the dragon- 
ades of 1898 — they found themselves at the time too weak and 
disorganised to venture upon a fighting policy. Bo they sought 
to obtain independent contracts, dispensing with middlemen. 
The authorities showed themselves favourable. The Baccariai 
Act authorised public authorities to give such societies contracts 
up to £4,000 without asking for security. M. Luzzatti, as 
'Minister, considerably increased the figure, and pressed the 
matter upon the attention of local bodies. Public authorities, 
like Count Guiccioli, when Prefect of Eome, and Comm. Dallolio, 
when Syndic of Bologna, particularly praised their work. In the 
early days it w^as a thing to w^ing admiration from one to how 
these poor men laid by out of their takings in order by slow degees 
to collect a working capital of their own. Barring the persecutions 
of 1898 they have done w^ell and prospered. One remarkable 
feature in their growth to powder has been the comparative ease 
with which they obtained working funds — not (at first, at any 
rate) from co-operative banks, which one might have expected to 
be helpful, but from private capitalists. 


The’affittanze movement was grafted upon the original stock 
about 1901. It was at a special gathering held after the Eeggio 
Congress of that year that the programme was settled. And the 
braccianti accordingly took their place in the Lego, nazionale — 
not among agricultural societies. The development was natural 
enough. All these men were dwellers in rural districts, familiar 
with agricultural work, and desirous of settling comfortably on 
Tura, which need not be paterna. Tenancy is difficult in Italy, 
because the latifundia, which, according to Pliny, perdidere 
Romam, are still in the ascendant, and Italian landlords are 
uncommonly grasping. They would also, not unnaturally, not 
take the risk of letting in detail to small unsubstantial men. The 
substitution of a co-operative society, pledging itseU in common, 
like our Tenant Co-operators,” removed one hindrance. And 
now these common settlement societies appear to flourish. One 
is particularly thankful to see the movement spreading in so 
encouraging a way in Sicily, wliere there is great need of it. The 
fact that, although these braccianti rent in common, they as a 
rule cultivate separately, does not, as Herr Preyer appears to 
infer, prove that they are not Socialists — for they consider them- 
selves Socialists to a man — but that common sense is stronger 
than theory. 

Herr Preyer incidentally touches upon Mezzadria— the old 
Koman Medietas. But there remains a great deal more to be said 
under that head. Antiquated as it is, during recent years of 
agricultural depression M ezzadria proved almost the salvation of 
Italian agriculture. 

Hbnby W. Wolff 

Co’-operation in New England, Urban and Rural. By James 

Ford, ,Ph.D. (New York: Survey Associates. 1913. 

12mo. Pp. 260. Price $1.50.) 

This little book, apart from telling British readers about 
” co-operative ” institutions in parts of the United States, ought 
certainly to prove useful in its own country. The United States 
literally swarm with institutions, at any rate, of the agricultural 
type, bearing the co-operative name. They, indeed, number 
thousands. However, of all these teeming thousands, there are 
very few indeed that would pass muster before a genuinely co- 
operative tribunal. The majority are rather “rings” formed in 
opposition to traders’ rings, which in the past have truly worked 
sad havoc among farmers. And yet the United States need 


<50-operation. 'Three Presidents — that is, the present, and his tw^ 
immediate predecessors — ^have borne public witness to this. 
tJnder the special benison of the Senate the Southern Commercial 
Congress is sending out a Commission of some hundred repre- 
sentatives to Europe to learn what co-operation applied to agri- 
culture is. In America this question has for a little time past 
occupied many minds. The State Department of Wisconsin has 
particularly distinguished itself by its researches. The “Eussell 
Sage Foundation,” of New York, which publishes. the book here 
noticed, has turned its attention to the same subject, and, as its 
General Director informs me, the object of the book is quite as 
much to show Americans “what may not properly be called 
co-operation as what some of the probabilities for it are.” 

Dr. Ford has well accomplished his task. He tells his story 
lucidly and succinctly, and is evidently master of his subject. 
Among other things he explains the causes which have thus far 
prevented co-operation from prospering. There is not, in truth, 
much to tell about that “industrial” co-operation which the 
Americans call “urban.” As among ourselves, industrial co- 
operation made an early start about the “thirties” with the same 
aims in view. But it did not live on or develop like our own. 
Now the existing laws stand rather in the way. However, foreign 
immigrants readily manage, notwithstanding, to establish their 
accustomed stores themselves. On agricultural ground there is 
plenty of “co-operation” and to spare, but it is self-seeking, 
speculative, in many cases exclusive. It is to be hoped that the 
forthcoming American inquiry into European methods will correct 
this, and place American agricultural co-operation on the proper 
footing. The present book may prove a good preparation for this. 

Henby W. Wolff 

Birminghmn Studies in Social Economics and Adjacent Fields. 
Edited by Professor W. J. Ashley. I. — Environment and 
Effidency : a Study in the Records of Industrial Schools and 
Orphanages, By Mary Horner Thomson. ll,~The 
Public Feeding of Elemeyitary School Children: a ^Review 
of the General Situation, and an Inquiry into Birmingham 
Experience. By Phyllis D. Winder. III. — The Social 
Policy of Bmnarck: a Critical Study, with a Comparison of 
German and English Insurance Legislation. By Annie 
Ashley, M.A. (1912. Longmans, Green and Co. Price 
25. each.) 

An editorial note states that “the studies in this series are the 
outcome of the inquiries of students working for the Social Study 



Higher Diploma or for the Higher Degrees of the University of 
Birmingham.” The Social Study course of the University of 
Birmingham is the “newest” enterprise of that “new” Univer- 
sitjr^ and deserves attention in itself before we look at its first 
fruits. A committee composed of teachers in the University and 
of representatives of the National Union of Women Workers, the 
Workers* Educational Association, the Trades’ Council, and other 
institutions in the city, supervises a course of systematic instruc- 
tion intended to provide for the needs of those desirous of serving 
on local governing bodies, of engaging as officials in national or 
municipal administration, or of taking part in philanthropic work, 
or as “welfare workers” at factories, as well as for the training 
in social questions of the clergy and the officials of trade unions, 
friendly societies, &c. The course covers one or two academic 
years, and embraces (a) university lectures in industrial h’ story, 
local government, sanitation and hygiene, elementary economics, 
industrial legislation, and social philoso]^hy ; (b) visits of obser- 
vation to institutions dealing with the administration of poor law, 
education, and justice, with sanitation and hygiene (hospitals, 
housing improvements, &c.), and with industrial conditions 
(factories, labour exchanges, &c.) ; (c) practical work — office work 
at the Birmingham Aid Society and the Birmingham C.O.S., 
visiting in connection with these two societies, and work as a 
helper in an approved school, club, class, &c. Exemption from 
certain parts of the practical work may be allowed to students 
already possessing such experience. A diploma is granted to 
those who satisfy the committee, and candidates who have ful- 
filled all the requirements of the ordinary diploma with a high 
degree of credit may be granted a Higher Diploma after a second 
year of study, in which they must take up two of the following 
University courses — advanced economics, public finance, methods 
of statistics, political philosophy, housing and town-planning. 
They must also submit a thesis embodying the results of an 
original investigation into economic or social conditions, con- 
ducted during the period of study under the direction of some 
member of the committee. Three of those theses are now 
before us. 

It would be easy to suggest extensions of this scheme of 
social study, and even to propose improvements, but, taking it as 
a whole, and remembering that the practical work is only possible 
through the co-operation of officials and manufacturers who have 
their own daily business to attend to, it is most admirable. One 
would have much more confidence in the efficiency of municipal 
officials if one knew that they had all gone through some such 


course of instruction in theory, history, and practice. Such 
instruction is just as necessary for the clerical or administrative 
staff as a knowledge of the principles of hygiene is for the sanitary 
inspector. Indeed, one might even go farther, and suggest that 
it would be extremely useful if Professor Ashley and other 
teachers engaged with the practical side of economics would draw 
up a similar course of training for civil servants. Adminstration 
becomes inconceivably more efficient when the administrator has 
a first-hand acquaintance with the material with which he has 
to deal as well as with his office-methods and precedents. 

Whatever may be the results on administration, there is no 
doubt as to the effect which this carefully-planned course of 
instruction has on investigation. Each of these three theses is of 
a high order of merit, and shows that the writer has approached 
her subject with sympathy, has accumulated her facts with care, 
and has criticised them with a keen sense alike of " their 
sufficiencies and their deficiencies. They are also well written, 
which, unfortunately, is much more than one can say for all post- 
graduate or, indeed, all professorial work. The arrangement is 
good, and the language is terse and clear. These same good 
qualities, however, make it difficult to summarise the reports. 

Miss Thomson’s object is to show the effect produced on 
children belonging to the lowest class of society when they are 
taken out of their surroundings and are properly fed and trained. 
Out of 265 cases investigated, 192 turned out satisfactorily, forty- 
four were doubtful, and only twenty-nine unsatisfactory, of which 
thirteen were “mental ” cases or “almost deficient.** Even in a 
batch of forty cases where the children were taken into institutions 
at the late age of eleven or twelve, tw^enty-eight were entirely satis- 
factory. The records cover, as a rule, at least four years after 
leaving the Home, and Miss Thomson’s standard is so high that 
on p. 32 a girl who finished by being a matron is classed in the 
category of unsatisfactory cases. The conclusion is that environ- 
ment is more potent than heredity in determining the fate of the 
slum child, contrary to the opinion of an egregious Mr. Mudge, 
who unconsciously travesties whatever is sound in eugenics and 
holds that “in social life the environment is the product ^f the 
individual,’* Miss Thomson’s final wnrds are : “So our race of 
hereditary paupers and criminals will form, as generation follows 
generation, an ever-increasing minority, until eventually — who 
knows? — they may be crowded out altogether by the mere force 
of a beneficent environment.” 

The Birmingham Education Committee gave Miss Winder 


special facilities for her investigations, so that she is able to give 
abundant particulars as to the condition of the families where the 
children require to be fed at the public expense. The evils of 
casual labour are once more made evident ; the benefit to the 
children from proper feeding is again displayed. Her most 
important practical conclusion is that the system of selectng 
children entirely by wSy of a fixed poverty scale is unsound, and 
that there should be the closest co-operation between the school 
medical service and the canteen committees. Her general view 
of the problem of school feeding is worthy of quotation : “ The 
greatest danger, perhaps, of a public provision of free meals 
is that they act as a salve to the conscience of the community 
who see the children being fed, and, thinking all is well, look no 
further. The meals themselves are only a palliative ; the real 
solution of the problem of the ill-nourished child can only come 
very slowly with more knowledge and better* conditions in the 
homes, with proper provision for times of sickness and for widow- 
hood, and with some solution of the problem of unemployment.*’ 
Miss Ashley first discusses the nature of State Socialism and 
its relations to Conservatism, and briefly sketches its history ; 
then she reviews Bismarck's character, and traces the develop- 
ment of his opinions. In the second half of her thesis she deals 
with the early history of insurance in Germany and with the 
provisions and principles of the Bismarckian legislation, com- 
pares German and British insurance legislation, and discusses the 
relations of insurance and self-help and of State action and 
charity. This is a study of an entirely different kind from the 
other two, but it is at least as good. The historical summaries 
are both full and concise, the treatment of Bismarck’s character 
is illuminating, the exposition of the insurance laws plain and 
lucid. Occasional flashes of humour light up the writing. The 
time is not yet for a final judgment of Bismarck and his policy, 
but, as Professor von Schmoller says in his preface, and Miss 
Ashley shows in more detail ; “There was always in his heart a 
feeling of noblesse oblige tow^ards the lower classes, and a con- 
viction of the social mission of the monarchy to protect them 
against exploitation by the upper classes; and, beneath' kll this, 
was an undercurrent of dislike of the money-making bourgeoisie. 
. . . An important factor in determining the scope and character 
of the whole body of insurance legislation was Bismarck’s desire 
to carry out the great undertaking rapidly, and, in any case, 
during his own lifetime.” 

Henry W. Macrostt 




Ge9<^hichte dee Sozialismus in England. By M. Bebb. (Stutt- 
gart : Dietz Nachfolger, G.M.b.H. 1916. Pp. xii4-512.) 

Wb do not know whether the author is acquainted with the 
advice of the late Professor Brewer that the best way to study 
history is to go to biography. There is a good deal of truth in 
the statement, even for general history, but in the case of the 
history of movements it is especially valuable. Herr Beer has 
adopted the advice in principle. His book shows clearly the influ- 
ence of the great and the small leaders on the development of 
Socialism in England —men such as E. C. Jones, George Holy- 
oake, Samuel Kjdd, to name but three. The English pioneers of 
Socialism may not be placed by the side of Marx or Lassalle, but 
certain it is that in their own country they were not without honour 
or success. Particulars of their lives are scattered about here and 
there. Herr Beer has, we believe for the first time, gathered the 
material into a whole and worked it around one central theme — 
the history of Socialism in England. 

Students owe a debt of gratitude to him for the work, seeing 
that there is no comprehensive treatise on this most interesting 
subject. Our only regret is that it should have been left to a 
German to supply the need. But this is no reflection on the 
author, who has done his work thoroughly and scientifically. 
The book is divided into three parts as follows : (1) from 1750 to 
1824, (2) from 1825 to 1854, and (3) from 1855 to 1912. The 
story is told in a business-like, straightforward manner, without 
any attempt to put forward original or new-fangled ideas. Par- 
ticularly good is the section dealing with the Ghartist Movement. 
The author’s standpoint — and this must not be left unmentioned — 
is confessedly Socialistic. (Is not the book priipited by the well- 
known Stuttgart firm which specialises in the production of 
Socialist literature?) This is to the advantage of the work. If 
we are to have a presentation of the growth of the Socialist move- 
ment in England, it is best that it should come from a Socialist. 
But let us add that this does not mean that the story is one-sided, 
extremist or exaggerated. Herr Beer is, it is true, a Socialist 
(he was the London correspondent of the Vorwdrts from 1901 to 
1910) ; but he is also a scholar, and the book is worthy of the best 
traditions of German research. Herr Beer has gone to the sources, 
not neglecting the general literature of each particular epoch. BQs 
quotations, of which there are many, are, of course, in German. 

The very straightforwardness of the book leaves little room for 
criticism. We have tested it throughout and have not met with 


any glaring errors ; on the contrary, the author shows an under- 
standing of English conditions, both in the present and the past, 
which is commendable. When he says that the year of the dis- 
appearance of the yeoman was not, as Marx held, 1760, but 1825, 
we doubt whether it is at all possible to fix any year definitely, 
though we should be inclined to favour the earlier period, if some 
date must be chosen. 

A serious thing in the book is the number of misprints. The 
author seems to be aware of them, but he has not seen them 
all (e.g., p. 405). We hope they will all be removed in the 
English edition, which, we understand, the author has in prepara- 
tion, and which is to be somewhat larger than the German. 

M. Epstein 

Histoire du peuple anglais au X/X® sihcle. Vol. I., U Anghterre 
en 1816. By Elxe Halt^wy. (Paris : JHachette. 1912. 
Pp. 615.) 

Professor Hal6vy*s book covers tbe whole range of social 
activities : politics, economics, religion, and the arts. Economic 
students will be mainly interested in Book II., La socUU 
iconomique. The book is more than a work of reference, but the 
small space, 174 pages in all, into which subjects so huge as 
agriculture, industry, transport, credit, taxation, and the Poor 
Law have to be fitted, makes it impossible for the author to add 
very much to our knowledge on any particular subject. As a 
general work, the English student will pronounce it useful, 
although, being a French publication, it contains no index. The 
reader already familiar with Prothero’s English Farming, Man- 
toux*s Industrial Revolution, and the historical writings of Tooke, 
Jevons, Andreades, Sidney Buxton, and the Webbs, will know 
in advance what the author has to say. But the book is a chal- 
lenge to Englishmen to write for themselves their own economic 
history during the nineteenth century, and doubtless some have 
already the challenge in their pockets. There are some interesting 
pages (298—300) and some valuable references (299, note 1) on 
the subject of the licenses issued on either side of the Channel 
since the period of Napoleon’s Continental system. To these one 
would now add the name of Professor Eugen Tarle, of Peters- 
burg, although his work, being in Russian, is inaccessible to most 
of us except through the French medium of an International 
Historical Congress. For closeness of research Professor Hal^vy’s 
book cannot claim to rival the chapters on economic history in the 
No. 90. — voii. xxiiT. V 

278 BconroMio [jtthb 

kter TOlumes of tho Cambridge Modern History, chapters which 
form refreshing oases .in that desert of crowded dullness. 

C. E. Fat 

The York Memorandum Book. Part J., 1376-1419. Edited by 
Maud Sellers, Litt.D. (Surtees Society. Vol. 120. 1912. 

Pp. lxxxvi+287.) 

The capital of the North has waited long for the publication 
of its early documents, and both economic and general historians 
will be most thankful to the Surtees Society and Miss Sellers for 
this first valuable instalment. The Memorandum Book, which 
“in form, matter, and date corresponds very closely with Letter 
Book H of the City of London,'* is essential for comparison with 
<rther mediseval records. The volume contains a number of 
documents both earlier and later than the period 1376-1419. It 
is particularly rich in gild regulations, for York was a city with 
a very highly developed gild life in the fourteenth and fifteenth 
centuries. Not that the gilds show any signs of independence of 
the town authorities : there are no civic gild revolutions ; but 
gild organisation is applied even to the tiniest groups of crafts- 
men or traders. Whereas Norwich, a town of comparatively weak 
gild life, had only six regular organisations in 1389, sixteen in 1440, 
and twenty -six in 1448, the York records for about the same 
period show forty-one gilds, varying in size from the tailors’ gild, 
with 128 masters, to the wax chandlers’ with six and the founders’ 
with five. The earliest ordinances here printed are those of the 
girdlers in 1307, which show a well-developed gild system with a 
four-year apprenticeship. A century later the seven-year period 
is practically universal. A fullers’ ordinance of about 1390 
suggests that the mastery was at that time open to competent 
men who had not been apprenticed : “Item que desormes chescun 
qad estee apprentice ou servant en le dit artefice et soit trove 
convenable a ocupier sicome mestre en mesme Tartifice,** etc. 
(p. 72) ; but other interpretations are possible, and I have not 
noted any other ordinance which settles the point. A difiiculty 
arises from the use of “servant ** by the York scribes. Sometimes 
it applies to anyone who is not a master (, p. 89) ; in one 
case an English cross-heading to a Norman-French document 
equates it with apprentice ; elsewhere it obviously applies to the 
wage-earning “journeyman,** a term very rarely used at York. 

The “servant,** in the later fifteenth century, at any rate, is 
often hired by the week, and from an earlier date we find refer- 


enceH to ** taskwork.!* The constant struggles to prevent men 
working for two masters, and to force them to work in their 
master^s shop only skinners, p. 63, sadlers, p. 89: both 

sets of ordinances undated), show how difficult it was to maintain 
what are usually called “typical gild conditions/* and how easily 
the hired man might become a home-worker if gild rules were 
relaxed. In the fifteenth century we get the skinner’s “servand *’ 
“that wyrkys a peny worth work for a penny, and wyll noght 
be governed at the serchyng of hys work be the serchours and 
maisters,** who is to be fined. He is surely either a home- 
worker or a short-hired man like those Norwich “servants ’* in the 
early fourteenth century Book of Customs, for whom “there 
masters are not answerable ... for that they are not of their 
mainpast because they receive a penny a day for a penny of 

There is no evidence of permanent journeymen’s organisa- 
tions, but the cordwainers, about 1435, complain that certain 
servants — inspired by aliens and other outsiders — “sine causa 
jasta recusant gubernari per statuta et antiquam regulam artis 
predicts, ** and “faciunt conventicula et congregaciones illicitas 
et confederaciones prohibitas ... in numero magno, contra 
magistros sues quibus servirent, contra bonuni usum civil atis 
hujus, et in contemptu regis*’ (p. 191). 

The documents contain abundant information on other points 
of special interest to the media>val economic historian, but of less 
interest to the modern economist — such as the gradual dissolu- 
tion of the merchant gild, the economic position of women in the 
mediaeval town, “overlap” disputes among gilds, the admission 
of strange craftsmen to gild privileges, the policy of the city 
towards runaway villains and aliens, and the close connection 
between gild life and pageantry. The modern economist may not 
even care to know that the saucemakers and sellers of Paris 
candles were specially interested in that pageant “in qua repre- 
sentatur quod Judas Scarioth se suspendit et crepuit medius” 
(p. 166). The media?valist, on the other hand, will note with 
interest that there was not at York that concentration of traders 
in Poultries, Milk Streets, and Ironmonger Lanes which one finds 
in so many greater mediaeval cities. There were, in any case, 
few trades in York big enough to dominate a whole street. 

Profound gratitude to the Editor is linked with a little regret 
at her insistence on dividing principal sentences by commas. 
“Certain boroughs, however, as early as the reign of Henry II., 
had obtained the right to treat freehold property in the same way 

V 2 

280 the economic JOUBNAIi (JUNE 

as personal, York was one of these, it became a matter. of first 
importance that a good title should be secured,’* &c. There are 
many such sentences. The Index is not quite perfect, as it should 
be in a book of this kind. There are two mistakes in the five 
entries under ‘Tlapham.** But there is no reason to think that 
this is an average proportion of error, and one of the mistakes 
is only the still very common confusion of Claphams with 

J. H. Clapham 

Weibliche Diensthoten und Diensthotenhaltung in England, By 
Dll. Lisa Boss. (Tubingen : J. C. B. Mohr. 1912. Pp. 
viii-f 99. 3 marks.) 

This little book describes the conditions of female domestic 
service in England, institutes a comparison with Germany in 
this respect, and draws some general inferences. It makes no 
claim to solve the servant problem, and very little attempt to 
forecast the future. 

The writer examines the motives underlying the practice of 
keeping domestic servants, and finds four factors at work. The 
housewife may help her husband in breadwinning, and employ 
a servant to replace her in the home. Or she may delegate her 
household duties in order to devote her time to the education of 
her children, to social w^ork, or merely to culture and recreation. 
Again, the mistress of a house may employ a servant, or a given 
number of servants, simply to conform to the standard adopted 
by her class. Lastly, she may keep any number of servants as a 
mere matter of luxury. Between the motives at 'work in the last 
two cases it is not easy to draw a definite line. 

It is clear that the practice first mentioned is economically 
productive, and directly so. The second, in the majority of 
cases, is indirectly productive, and therefore economically sound. 
In the third class of cases we are dealing with conventions which 
it is difficult to criticise. The fourth must be unconditionally 
condemned. Where the energies of women are set free for no 
useful purj)ose, we can only get national waste. 

Dr. Ross is of opinion that the second factor is the more 
predominant in Germany, while the third operates more strongly 
in England. She supports this view by the fact that technical 
improvements and labour-saving appliances in the home are 
immediately followed by a reduction in the number of servants 
in German households; while in England the correspondence 


betweeu the amount of work and servants employed is much less 
marked, showing that the practice is more a matter of custom 
than of need. 

In England the proportion of servants kept has always been 
greater, their wages have always been higher, and their condi- 
tions better than on the Continent. The lowest wage,, paid 
to cooks and parlourmaids in London is well above the average 
paid anywhere in the G-erman Empire. In England, too, the 
domestic servant is a much more independent and detached indi- 
vidual than in Germany. Domestic service is, indeed, in a 
transition stage everywhere ; it is losing its personal character, 
and tending at last towards the condition of free contract which 
exists in other occupations. England, which has been half a 
century ahead of the Continent in all matters affecting domestic 
service, is naturally in the van of this movement also. 

The servant problem is doubtless not to be solved by the arm- 
chair economist. Still, it is a pity that the thoughtful analysis 
of the early chapters of this book was not followed up by a 
consideration of the future of domestic service on the basis of 
free contract — a development which is imminent. The WTiter 
has deliberately restricted her inquiry to household servants in 
direct personal relations with their employers, and therefore 
leaves out of consideration the whole body of hotel, club, and 
institution servants. These are, however, much more highly 
organised than the rest of their class, and have already achieved 
the impersonal relation to which all are tending. A little more 
consideration of their conditions would have repaid study, and 
might have indicated the lines on which a solution of the servant 
problem may be sought. 

H. Ebinhbrz 

Die allgemeine Ndhrpflicht als Losung der sozialen Frage, By 
Josef Popper-Lynkeus. Dresden ; Carl Eeissner. 1912. 
Pp. xvi + 813. 

There have been many suggestions put forward for the 
amelioration of the world and the improvement of social con- 
ditions. Louis Blanc’s, Proudhon’s, Henry George’s, Eichard 
Bellamy’s, Franz Oppenheimer’s, are a few that are well known 
to Economists; and now comes Josef Popper (Lynkeus) as the 
latest prophet of the golden age. He has w^eighed his precursors 
in the balance, and has found them wanting. Hence his own 
scheme, in which he appears to place exceeding great faith. 


, Jit would be idle to assert that his considerations are not 
without value or that his suggested scheme lacks interest. But 
it seems hardly necessary to have expatiated upon it at such great 
length. Surely one-fourth of the eight hundred odd pages would 
have amply suflSced. But the author is fond of a good fight ; he 
has jousts with the sociologists, whom he just tolerates, and with 
the economists, whom he positively despises. In fact, he holds 
the view that ecopomics is only a pseudo-science, and he devotes 
many pages to prove this thesis. Almost every German and 
Austrian economist of note is quoted and slashed about, and 
we are bound to confess that this part of the book is not unin- 
structive. The author, however, wishes his work to be looked 
upon not as a scientific piece of reasoning, but as a programme 
pure and simple. 

It is an attractive programme. Herr Popper starts out with 
what is undoubtedly one of the most tragic facts of modern 
economic life — the uncertainty "as to their livelihood by which the 
great mass of workers are weighed down. His axiom, therefore, 
is that every state should see to it that each of its subjects is 
assured a minimum of comfort, so as to be placed in a position 
of economic security, no matter what happens. 

This minimum shall include food, housing, clothing, medical 
and nursing attendance, and also burial. To provide for these 
wants there shall be instituted an Industrial Army of men and 
women, parallel with the existing military forces, and rec^&ited 
in the same manner as these are — by corscription. Every man 
and woman in the state will have to serve for a number of years 
in the Industrial Army, giving up a span of their life to the state, 
as the soldier in training does to-day. 

Everything produced by the Industrial Army shall be divided 
in kind among all the citizens according to their needs. But how 
are these to be determined? Our author is a little vague on this 
point. Physiology, he says, makes it abundantly clear how much 
food, and of what kind, any person requires for perfect health. 
So much the state shall give him as his minimum. And as for 
housing, “we know from researches in hygiene of what size 
healthy dwellings should be, and how constructed.” 

But suppose that not sufiicient is produced for the minimum 
of all ? The author has two answers to this possibility. In the 
first place, if it should be necessary to suffer hunger, then all 
must suffer alike. In other words, the general minimum must 
be lessened by an equal amount in every case. He feels, how- 
ever, that that is not the ideal way out of the difficulty. Hence 

1013 } FOPFBft : OIB igEtXiQBlCBlBE 083 

hk secontd proposal : the stjlile shall limit the number of births. 
l!!he method of achieving this end is certainly original; readers 
■will find it in the last chapter of the book. 

Side by side with the work of the Industrial Army, private 
undertakings shall be allowed to exist, but they are to produce 
only luxuries, i.e., that which is over and above the minimum 
standard. Here the present economic order shall continue, with 
competition, wages, strikes, lock-outs, and so forth. When you 
have served your time in the Industrial Army you may follow any 
calling you choose. Of course, seeing that every citizen will have 
provided for him the minimum of existence, wages will tend to be 
lower than they are now. 

This, in brief, is the two grains of wheat hidden in the two 
bushels of chaff. The scheme seems an earnest attempt at a 
solution of the social question, and not a few people will agree 
with the author’s fundamental principle. The difficulty will be 
concerning its realisation. Nevertheless, all social reformers 
should find the book interesting. The second part, which is con- 
structive, will appeal most to them ; while the first part, which is 
critical, will not be without use for professed economists. 

M. Epstein 



Thr tables published in the Economic Jocrnal of June, 1912, 
are brought up to date below by the addition of the figures 
for 1912. 

Table I.— (Line A of Diagram). 











1. Caledonian 



















2, Great Eastern | 



















8. Great NortJieni ...j 



















4. Great Wc«lern " | 









4 00 










5. Lancasiiire and Yorkshire ...| 



4 -00 















6. London and North Western j 



115 0 















7. London and 8outh Western ^ 



















8. London, Brighton and South] 










Coast \ 










{a) Manchester, Sheffield/ 


and Lines ... 1 

i>, (b) London. Tilbury, andi 
Southend ... ... ... 1 










113 0 






! 117 0 



(c) Great Central 

10. North British | 














110 4 





/Dividend, per cent. 





3-55 i 


i 3*55 



Averse of 1 Price, „ ... 

the Ton lYield, „ ... 





1.39*16 1 


1 107-78 

96-95 j 








1 3.6.7 

8.14.0 1 


lYears' Purchase .. 


28-0 i 






26*8 1 


The dividends tire those paid during the year. 

Table II.— (Line B of Diagram). 





19] 1, 


1. Metropolitan Consolidated (1941) 
3% Stock 






2. Birmingham Corporation (1947) 

3% Stock 

8. Bristol Irrodeomable 3}% Stock 









4, Cardiff (1935) 3i% „ 





96 00 

5. Glasgow Irredeemablo 84 % ,, 






6. Liverpool „ 3J% „ 






7. Manchester ,, 4% ,, 

8. Newcastle (1936) 3i% „ 











9. Nottingham Irredeemable 3% ,, 






10. Bradford (1946) 8i% 

123*26 i 





Average of ® 






2.13.4 i 

3,1.4 i 









Ta&SiB III. — (Line 0 oi I>iagram). 


1. Caledonian 

2. Great Eastern 

3. Great Western 

4. Lancashire and Yorkshire 
6. London and North Western 

6. London and South Western 


7. London, Brighton & South Coast | 

8. North Eastern “ Consols 

9. North Staffordshire ... 

10. Taff Vail 


• I 


Average of J 
the Ten 

^Dividend, per cent. 
Price ,, 

Yield „ 

^ Years* Purchase ... 































































163 00 










183 62 




































1 6-097 



131 -089 














The dividends are those paid during the year. 

Table IV. — (Line D of Diagram). 

Dividends and Mean Prices. FOREIGN AND COLONIAL RAILWAY 






1. Northern of France 3% Obliga> 






2. Grand Russian (Nicolai) 4% Bonds 

99-0 , 





3. Pennsylvania 4i% Gold Bonds . 






4. Chic. Mil. and St. Paul 4% Gen. 
Mort. Bds 







5. Buenos Ayres Gt. Southn. 4% 
Deb. Stock 







6. Central Argentine 4% Deb. Stock 

7. Mexican Railway 6% Perp. Deb. 












8. Nitrate Railways 6% 1st Mort, 
Bds 1 






9. Canadian Pacific 4% Con. Deb. 
Stock I 






10. Atlantic and St. Lawrence 6% 






Averse of 



















Ti^BLV V.— (Line of BiagriJOi). 

"DiddmdB and Mem Prices. FORBiaN AND OOLONUL RAILWAY 






191 S . 

1. Canadian Pacific ...| 

2 00 i 









2. Chicago, Milwaukee/ 
and St. Paul ...\ 











8. Illinois Central | 











4. New York, Cent, and J 






Hudson’s River ...\ 






5. Pennsylvania | 











6. Buenos Ayres Great/ 


1 7-00 





i 187-76 




7. Buenos Ayres West ern|^ 











8. Central Argentine 











(a) Rio Olaro San ( 


Q Paulo J 

(b) Great Western of] 










Brazil V 






10. San Paulo ( Brazilian )| 





207 19 



284 50 

Aver- /Dividend, por cent. 






age of J Price ,, 






the 1 Yield 






Ten v. Years’ Purchase 







Tho dividondR aro those paid in the year. 

A slight error in the 1911 figures in Table V. has been cor- 
rected. The diagram which appeared a year ago is brought up 
to date on p. 287. 

The added figures in no way alter the effect of those which 
precede them. British Eailway Debenture stocks and British 
Municipal stocks have continued their decline, and there is still 
no sign of any change for the better. British Eailway ordinary 
stocks have likewise continued to fall in price, though, through 
strikes having reduced dividends in a higher ratio, “years’ 
purchase of dividends ” in their case shoTvs an incfrease. Foreign 
and colonial railway debentures have declined, but to a smaller 
extent than the corresponding British stocks ; while the rise in 
“years’ purchase of dividends ” observable in foreign and colonial 
railway ordinaries is due more to rise in price than to fall in 
dividend. Thus the problem remains a double one— we have not 
only to deal with a movement adverse to British home invest- 
ments, but with one which foreign and colonial investments 
share, if at all, only to a less extent. 

288 THB Eomouic JOXJBNALi ' [jtJKB 

The effect of ^‘redemption** upon the averages shown in the 
tables, and therefore upon the lines in the diagram, has been 
carefully looked into. Some of the investments in Tables II. 
and IV.— British Municipal securities, and foreign and colonial 
railway obligations — are either in process of redemption or liable 
to be redeemed at future dates. A comparison of the prices of 
these with the prices of the others in the same groups shows that 
the effect of redemption is not, in any case, great, and as it 
operates in both directions — in some cases raising, and in others 
depressing, prices — the net effect upon the averages, and there- 
fore upon the lines in the diagram, is negligible. So also as 
regards the matter of “rights ” to new issues (to which reference 
was made on page 224 of the former article), an examination of 
the effect of not taking account of them in the tables has been 
made, with the result that it is clear that to include them would 
be extremely difi&cult, and that, even if it could be satisfactorily 
accomplished, it would merely widen to some extent the space 
in the diagram between the lines C-C and E-E. No alteration 
of the diagram, therefore, is called for on account of either 
“redemption *’ or “rights,** and its lessons remain unimpaired. 

Professor Cohn, in the Economic Journal of December last, 
mentions the previous article generally with approval. He finds 
it “very justly maintaining** that the price movements of our 
home investments cannot be attributed to the fortunes of our 
political parties; “on the right track** when it says that the 
Colonial Stock Act is not the cause of the depreciation, and when 
it draws attention to the flow of British capital to other countries ; 
and of the movements themselves he says, “these movements 
in the various kinds of investments are accurately illustrated by 
means of instructive tables.’* But he complains that the parallel 
which he sees between the movements of British Government 
securities and those of the securities of foreign states has not 
been noticed by the writer. 

Professor Cohn finds “the pith of the matter ** in the “identity ** 
of the fate of German, French, and English State securities. The 
writer, on the other hand, finds it in the “exceptional** fate of 
British home investments when compared with similar foreign 
and colonial investments. Which field offers the better chance 
of finding “the pith of the matter *’ — the “ State ** or the “other ’* 
investment market — is no doubt open to discussion. Admitting 
the great ^portance of the market for State securities, is it not 
at least possible that the other markets, with their superior facili- 
ties for grouping, and their comparative remoteness from political 


mfltiencses, afford the better field of study as liegards the past? 
And when the survey is extended “to the future and to the coming 
movements in prices/’ are we not likely to get the better guidance 
from markets which possess these advantages? It is from con- 
siderations of this kind that the waiter has been led to leave the 
“State” market to others. 

"Professor Eist, in the Revue Economique Internationale of 
March last, expresses surprise that the previous article regarded 
the depreciation of British home investments as exceptional, but 
he entirely ignores the evidence cited in support of that state- 
ment. The tables and the diagram require more consideration 
than he seems to have given them. How does he explain, for 
instance, the enormous difference between the two lines C-G and 
in the diagram ? His article goes a long way to prove that 
Prance has been very prosperous during the past fifteen years, 
and that as a consequence French investors have been attracted 
by her industrial and commercial issues. It is good that France 
has prospered, but it does not follow that Great Britain has been 
equally fortunate. There is, indeed, as will appear later, grave 
reason to fear that she has not. 

Other writers — notably Professor E. A. Lehfeldt, and M. Paul 
Leroy-Beaulieu, the former in the Eoyal Statistical Society’s 
Journal, and the latter in L* Economist c Frangais (of January 
last) — have been dealing in different ways with the subject of 
falling prices in the investment markets, and their writings are 
of much interest. But they have not said anything which seems 
in the slightest degree to shake the evidence of the tables given 

The conclusion reached, on other evidence, in the previous 
article — that “the exceptional decline in the value of British 
home investments synchronises with, and may be very largely 
due to, exceptional competition, first in the iron trade and after- 
wards in other manufacturing trades of this country ”—may seem 
falsified by the many reports of general prosperity during 1912, 
but signs are not wanting that, so far as the trades referred to 
are concerned, the prosperity is apparent rather than real. No 
figures — official or otherwise — are available whereby industrial 
profits can be accurately measured ; but now and then light is 
shed on the subject, and on October 5th last two speeches were 
reported from which something may be learned. Mr. W. Peter 
Eylands, at the ordinary general meeting of the Pearson and 
Knowles Coal and Iron Company, Ltd., is reported as saying 

2SK) ncommo ^bvmAh ,< [jvnm 

that during the last few years he could not call to mind one 
single new company carrying on a similar business being started 
"in the iron and steel trade. He had known plenty of companies 
go down, crushed, doubtless, by the burdens which had to be 
borne by the industry. Two or three companies had closed down 
during the last few months, tired of struggling, and had gone 
into voluntary liquidation. No new company conld start with 
any hope of success under existing conditions. ...” This points 
unmistakably to a loss of capital and resources which, in any 
general estimate of national prosperity, must written off 
against the profit made by similar concerns elsewhere. The 
other speech was by Lord Aberconway at the annual meeting of 
the Sheepbridge Coal and Iron Company, Ltd., who gave figures 
which showed that the pig iron output of that company had about 
doubled during the past twenty years. The capital had, he said, 
remained “practically the same” during that period, and the 
dividend had “kept up.” If this condition of things applies to 
our coal and iron trades generally, it w^ould seem that those of 
our mining companies which remain at work are exhausting their 
resources, and therefore what remain of the mineral resources of 
the country, twice as fast as they were twenty years ago, without 
improving their profits in doing so. Regarded in the light thrown 
upon them by these two speeches, the Board of Trade figures, 
whether we take them from “Iron and Steel, 1911” or from 
other returns, are certainly not calculated to inspire one with con- 
fidence in the strength of our manufacturing position, based as it is 
so largely upon our mineral resources. A glance at the figures given 
us bv the Director of the Census of Production shows how com- 
pletely, if we omit trades occupied in housing, clothing, and 
feeding the people, our industries are built upon our coal and 
iron. How far we can find profitable employment for our people 
if our iron mines fail us is problematical. We are, it is said, 
more and more devoting ourselves to high-class manufactures, 
and so long as that field is open to us we can, no doubt, provide 
good careers for those who qualify themselves for such work, 
even if we are compelled to import pig-iron. But meantime the 
continued drift of both capital and labour to the colonies and to 
foreign countries indicates that emigration presents to both the 
expectation of a higher reward than is obtainable by remaining 
at home — in other words, that competition is so severe in this 
qpuntry that both capital and labour are running away from it. 

A Stockbeoker 


. Ambbican Agbiooltubal Commission. 

’ It has been announced in the Press that an inquiry is about 
to be made on the Continent, and in the United Kingdom , into the 
organisation of agriculture by a large American Commission, in- 
cluding among its members delegates from most of the States 
of the Union and from one or more of the Provinces in the 
Dominion. They will arrive about July 8th in London, and sail 
from Queenstown on the 18th. The origin, scope, and purpose 
of the inquiry are set out in a Senate paper (Document No. 1071) 
ordered to be printed on February 11, 1913. But even those who 
have seen this Document, if they arc not familiar with the 
sequence of events which led up to the appointment, of the Com- 
mission may, I think, be assisted in understanding the real mean- 
ing of the inquiry by the supplementary information which I now 
offer to readers of The Economic Journal. 

For the inception of the project it is not necessary to look far 
back. Towards the end of Mr. KoosevelCs administration a wave 
of new thought upon the social condition and economic needs of 
the farming population swept over the United States. Its growth 
was stimulated by the Conservation movement, the aim of which 
was to call public attention to the reckless waste of the natural 
resources of the country by exploiting capitalists, and to promote 
legislation to restrain it. In the course of the discussion it was 
frequently pointed out that by far the greatest national waste was 
to be found in the depletion of the fertility of the soil. Already 
the effect of bad Jausbandry was seen in the declining exports of 
agricultural produce. In the next few years, unless some radical 
change takes place, the United States will have to import some 
of its staple foods. The rising cost of living — the most vital 
question of the day in that country — is attributed by many to a 
faulty agricultural economy, the chief defect of which is the 
total lack of business organisation amongst those engaged in pro- 
ducing the nation’s food. This disadvantage, under which these 
workers labour, is accentuated by the high degree of perfection 
attained in the organisation of other American industries, since 
in their mutual transactions organised interests prey upon the 
unorganised. Upon an unsound economic foundation no pros- 
perous social life can be built up. 

Whatever may be thought of such generalisations, it cannot 
be denied that, despite its unique physical opportunities, American 
agriculture, both as a social and as an economic force, is unnatur- 
ally and unnecessarily depressed. The thinkers of the towns are 

292 i?HB EooKomo jotruNlt [jxmB 

becoming more and more alive to their ultimate dependenc^e upon 
the welfare of the farmers, and for the first time since the indus- 
trial revolution public opinion is beginning to give to agriculture 
its proper place in the national economy. This is, I think, a 
substantially accurate description of the state of facts which was 
held to need the serious attention of thoughtful men in the United 

The first serious attempt to initiate a scheme of rural better- 
ment was the appointment in 1908 of the Country Life Commis- 
sion. This body held sittings, to which all and sundry were 
invited to come and give evidence as to local agricultural condi- 
tions, in almost every State in the Union. They published a 
report which did not immediately lead to action, but set people 
thinking. The daily Press and the popular magazines took up 
the “back-to-the-land ” cry. The Federal Department of Agricul- 
ture, the universities and agricultural colleges, the churches and 
many other agencies of social progress, agitated questions of rural 
econorny with increasing activity. 

In April of last year an important and representative conven- 
tion was held at Nashville, Tennessee, under the auspices of the 
Southern Commercial Congress — an Association of public men 
drawn from sixteen of the Southern States. Persuaded, I think 
it may be said, by the eloquent advocacy of Mr. David Lubin, the 
United States delegate to the International Institute of Agricul- 
ture in Rome, those present came to the conclusion that a 
reform in agricultural credit would practically solve ah the serious 
difficulties which beset the farmer. The resolutions adopted at 
this convention called for the apix)intment of the Commission, for 
which the Uniled States Senate subsequently bespoke diplomatic 
courtesies abroad. 

The movement grew in popular favour. Each of the three 
parties in the presidential campaign included agricultural credit 
as a prominent part of their constructive policies. On December 
7th, President Taft convened a meeting of Governors at the White 
House to discuss the project, at which it was decided to commend 
it to all the States. The appointment of delegates thereupon 
commenced, and the Southern Commercial Congress set about 
making the arrangements for the European tour. 

Meanwhile economic thought, aroused by a state of facts 
above indicated, progressed rapidly, and a mere inquiry into agri- 
cultural credit no longer satisfied those who had adopted the new 
conception of the proper place for the country’s basic industry. 
Moreover, the ix)pularity of the project was being threatened by 


doubts, expressed in^i^any quarters, as to whether agricultural 
credit -a highly tecHbical subject on which there is abundant 
and excellent liteJrature — was one which could be hopefully inves- 
tigated by such a body as was proposed in a summer tour. It 
was therefore decided by the Southern Commercial Congress to 
instruct the Commission, instead of treating agricultural credit 
as the dominant, if not the only, factor in the development of 
rural life, to inquire into and report ui^on the entire organisation 
of the farmers* business in the countries to bo visited. This 
change of procedure was approved by Mr. Taft, the then Presi- 
dent, and was strongly endorsed by President Wilson and ex- 
President Eoosevelt. 

Eeaders of The Economic Journal will be chicly interested 
in the concluding ten days of the European tour, which will be 
spent in the United Kingdom. Had the inquiry been, as origin- 
ally projected, restricted to agricultural credit, Jittle W'ould have 
been learned'-^ these islands. Indeed, there is only one issue 
within the scope of their inquiry, broadened, as has been explained 
above, upon which the Commission is likely to obtain valuable 
assistance. On this issue a few words may be usefully added. 

By the time they arrive in England, the Commission will 
have learned the essential difference between the agricultural 
economy of the Continent, on the one hand, and that of the 
United States and other English-speaking countries on the other. 
It lies in the organisation of the farmers* business. In the former 
countries farmers have learned that methods of combination can 
be applied to agriculture as to all other irrii)ortant industries, 
provided the co-operative is substituted for the Joint Stock system 
of organisation. That lesson has been gradually learned by some 
of the farmers of the United Kingdom, hrst in Ireland, then in 
England, and later still in Scotland ; it will also have to be learned 
in the United Stat<^. It is highly probable Ibat (ho chief subject 
of inquiry over here will be the metliods by which the English, 
Scottish, and Irish organisation societies are endeavouring to 
develop agricultural co-operation among the fai'mers of these 

Horace Plunkett 

Ko, 90. — VOL. ZXIII. 





The Genebal Stbikb in Belgium, 

The general strike which took place in Belgium from April 
14th to 25th, 1913, was entirely political in character. It arose out 
of the feelings of exasperation which animated the Liberal and 
Socialist Of>position, after the elections of June 2nd, 1912, had 
resulted in a triumph for the Catholic Government so overwhelm- 
ing as to surprise even the victors. The mot d'ordre of a “general 
strike for universal suffrage” went forth from the Socialists of 
Hainaut; and an Extraordinary Congress of the Labour party, 
which was held on June 30th, 1912, accepted the idea with 
enthusiasm, entrusting the arrangements for its execution, in- 
cluding the choice of a suitable date, to a National Committee. 

As soon as the Parliamentary Session had opened in November, 
notice was given by the Socialist deputies of a motion for the 
amendment of the* Constitution, by which universal adult suffrage 
should be substituted for the system of plural voting actually in 
force. The motion was not debated until January. The Govern- 
ment w^as able to command a majority sufficient to carry the 
adjournment of the whole question, and even refused to appoint 
a Commission of Inquiry, as proposed by Monsieur Hymans, the 
leader of the Liberal Opposition. Not till then did the National 
Committee decree a strike, to begin on April 14th, 1913. The 
Mayors of the principal provincial towns thereupon undertook to 
mediate between the Prime Minister and the leaders oi the Labour 
party. They expressed belief that the Government would be 
willing to appoint the desired Commission, if the threat of a 
strike was withdrawn. Accordingly, the Strike Committee 
resolved on May 8th to abandon the strike. The Prime Minister, 
however, did not consent to extend the scope of the proposed 
Commission to the Parliamentary franchise, and announced his 
intention of confining it to the amendment of the municipal and 
provincial franchise. Discontent broke out with renewed force 
in Socialisti circles, and in spite of the opposition of accredited 
leaders such as MM. Vandervelde and C. Huysmans, the Congress 
held on March 24th resolved, by a large majority, on a strike to 
begin on April 14th. 

I have called attention to these preliminary delays in order to 
show that although the strike had long been agreed upon, the 
preparations were hampered by successive periods of uncertainty. 
The only resources available were the workmen’s individual 
savings and the subscriptions of a few middle-class sympathisers. 

1918] TEK iK BBLOltJM 295 

It is a matter of common knowledge that the Belgian Syndicats 
ouvriers have no reserves at all comparable to the funds of English 
Trade Unions; nioreover, for fear of exhausting their fighting 
forces for a long time to come, it had been decided that the ordinary 
funds should not contribute to the expenses of the strike. 

The period of time immediately preceding the stoppage of 
work is particularly interesting from the point of view of social 
psychology. An intense and widespread uneasiness made itself 
felt throughout a great portion of the population, especially in 
the large towns and industrial districts. Catastrophes, violence, 
and terrorism were predicted by some ; others were sure that the 
strike would be a miserable failure ; all, whether openly or secretly, 
took elaborate precautions. There was not a middle olass house- 
wife but laid in a stock of coal and provisions, and many supplied 
themselves out of all proportion to the danger. In fact, there was 
a very extraordinary panic before the event. Manufacturers, too, 
tried to guard against the consequences of tlie strike by such 
arrangements as were necessary to meet a temporary stoppage, 
and by precautionary measures for the p"*otection of their goods 
and premises. It was these precautions which, to a certain extent, 
averted the disasters which a sudden, unforeseen stoppage could 
not have failed to bring about. 

We may venture on the assertion that the strike attained the 
maximum proportions anticipated by anyone acquainted with 
industrial conditions. No official statistics were published, and 
none need be expected. The “Ministere de ITndustrie et du 
Travail,” which keeps a careful record of the numbers concerned 
in stoppages, and of all the incidents of ordinary strikes, decided 
to leave out of account a strike whose aim was purely political. 
We must therefore fall back on the statistics published by the 
two parties, which cannot, from the nature of the case, be accepted 
as impartial. Taking the most trustworthy calculations, the total 
number of strikers at the outset was nearly 300,000, and the 
maximum of nearly 400,000 was reached on April 19th. 

As the total working population of the country is estimated 
at over a miUion, those who expected a universal stoppage could 
fairly declare that the strike had failed. But it is clear that 
neither the small independent workers, nor those engaged in home 
industries or in agriculture, can have contributed any appreciable 
contingent to the body of strikers. Nor, with the exception of 
the port of Antwerp, were the transport industries much affected ; 
there was no stoppage of the State railways, nor interrruption in 
the tramway services ; and the public gas and electric works 

X 2 




scarcely suffered. On the other hand, all the great manufactures 
were paralysed. If we estimate that these absorb 700,000 work- 
people, the strike certainly withdrew one half of them. The 
stoppage was practically universal in all the collieries in the dis- 
tricts of Liege, Charleroi, in the midland districts and in the 
Borinage. The great metallurgic factories were reduced to com- 
plete inactivity or to the most trifling output. Even working- 
class groups, which were not ofi&cially connected with the Labour 
party, and which do not always obey the word of command, such 
as the glass workers of Hainaut, and the woollen unions of 
Verviers, threw in their lot with the strikers. The Brussels 
compositors, after refusing to stop work, were drawn into the 
movement after the second week — though the only large daily 
paper which was prevented from going to press was the Peuple, 
the organ of the Labour party. 

Although, therefore, the economic life of the country was not 
brought to a standstill, and although the immediate needs of 
the nation were supplied, yet large-scale production was com- 
pletely arrested. The industrial centres of Liege and Charleroi 
offered an impressive spectacle — smokeless chimneys, noiseless 
workshops ; the Black Country had become green and clear, but 
over it brooded the silence of death. The port of Antwerp, with 
only half its usual consignments and gangs of casual lightermen , 
seemed an organism whose life was ebbing from it. All retail 
trade, and, oddly enough, the life of the streets, the Irafiic of the 
restaurants and cafes, the patronage of the picture theatres, were 
visibly diminished. 

The records of the number of railway carriages in use on 
State railw^ays, which are published weekly, afford a remarkable 
testimony to the state of affairs : — 

Week. No. of carriages employed in transport of 

Coal and Other 

Coke. Goods. 

April 14—20, 1912 27,694 87,613 

April 13—19, 1913 7,200 70,402 

Decrease 20,494 17,211 

April 21—28, 1912 26,280 88,914 

April 20—27, 1913 9,145 70,660 

Decrease 17,086 18,364 

Total decrease in the fortnight 73,154 

It would bei interesting to know what decrease took place in 
the number of workmen’s weekly passes ; but this, unfortunately, 
the Ministry refuses to divulge. 


It would be premature to attempt any estimate of the direct 
losses suffered by the working classes and by trade. The figures 
of Fr.10,000,000 to Fr. 12 ,000,000, lost in wages during the first 
week, would appear to be a moderate estimate. The indirect 
losses are incalculable ; retail trade has been suffering for two or 
three months, and export trade has received a serious blow, the 
effects of which have yet to make themselves felt. 

The political consequences of the strike have been considerable. 
From April 16th, when Parliament reassembled, the strike com- 
pletely monopolised its attention. It was hotly and continuously 
discussed. And the Prime Minister, reverting to a previous 
declaration, eventually admitted, in the course of the debate, that 
the Commission which would be appointed to discjss the amend- 
ment of the municipal and provincial franchises, might also 
occupy itself by “talking** of the parliamentary franchise. The 
point was skilfully taken up by the Opposition, and the declara- 
tion was considered satisfactory by the Socialists. It was made 
the subject of an order-of-the-day, which, while condemning the 
general strike, nevertheless aroused a hope that the desired 
amendment of the constitution was in sight. A Socialist Congress, 
summoned as a matter of urgency on April 23rd, decided on the 
resumption of work, which took complete effect on the 2^th. 

There can be no doubt that the Labour party emerges from 
this experience with enhanced reputation. It has given evidence 
of a remarkable control over the working population, and ability 
to enforce discipline and exact considerable sacrifices for the sake 
of political reform. It has given proof of conspicuous organising 
power, and has gained much prestige from the fact that the strike 
remained everywhere from first to last completely peaceable, in 
spite of the fact that the entire country w^as covered with troops. 
Monsieur Vandervelde was justified in the statement that the 
strike had surpassed all the hopes that had been entertained. 

The impartial observer, however, cannot fail to think with 
apprehension of the future. It is clear that the temptation to 
repeat this kind of experiment will henceforth be very strong ; and 
we may well ask with anxiety what irreparable misfortunes such 
events might not bring in their train, if they were frequently 

E. Mahaim, 

Correspondent of the Royal Economic 
Society for Belgium. 

Liege, May, 1913. 




The Eailway and Canal Tbaffic Act, 1918. 

After a delay extending to almost two years, this Act, which 

intended to redeem the promise made by the Government to 
the railway companies at the time of the Eailway Strike, has 
been passed. For a number of years the railways have suffered 
from steadily rising costs of working, and owing to the conditions 
laid down in the Eailway and Canal Act, 1894, they have not 
been free to advance rates to meet the growing costs. The rail- 
ways have gradually become less and less profitable, and have 
found an ever-growing difficulty in raising the capital necessary 
to an expanding business on terms which would make its employ- 
ment profitable. Improved methods of working have done some- 
thing to relieve the situation, but the demands of labour have 
kept pace with such improved methods, and even threatened 
to absorb more than the whole gain. 

It was evident that some modification of the Act of 1894 was 
necessary. That Act, compelling the railways to justify any 
increased rate by proving that the amount of the increase was 
reasonable, has been interpreted by the Eailway and Canal Com- 
missioners in a narrow way. Practically the only proof accepted 
has been evidence of increased costs of working the particular 
traffic. Except in the case of a commodity like coal, which is 
worked in train-loads, the requirement is almost impossible to 
fulfil. The result has been that rates have become stagnant. The 
railways will not, or .rather dare not, lower them, unless the 
results from so doing are practically known. 

To some extent the new Act should relieve the position. For 
the future, in so far as increased expenses are due to improve- 
ments in the conditions of employment of their servants, it will 
only be necessary for the railways to show that the advances in 
rates are to meet such expenses, and in the total are not more 
than reasonably sufficient for the purpose. At the present time 
wages account for about 45 per cent, of the railways’^ annual 
expenses. So, if rates can rise and fall with wages, there will 
be far less reason for the railways to hesitate about lowering rates 
experimentally. To some extent the Act should restore the 
elasticity to rates, which they have lost since 1894. 

Whether it will do so or not depends largely on the interpreta- 
tion that the Eailway and Canal Commissioners put on two condi- 
tions in the Act. Clause 1 (d) lays down that the proportion of the 
increase allocated to the particular traffic must not be unreason- 
able. What proof that it is not so the Commissioners will require 




it is impossible to say at present. Then the Commissioners 
are authorised to take into account “any circumstances'* that are 
relevant to the determination whether an increase of rates or 
charges is or is not greater than is reasonably required. This is 
understood to mean that economies due to improvements in 
methods of working or in appliances may be taken into account. 
Thus the rates of locomotive men’s wages have advanced about 
16 per cent, during the past ten years, but owing to larger engines 
the total expenditure on locomotive men’s wages has not increased 
as fast as the growth of trafl&c. It is conceivable that the Com- 
missioners might decide that this was a circumstance which they 
might take into account to the extent of ruling locomotive wages 
off the bill. If that were done, then it would be v^ry like putting 
a premium on bad working. 

A very great deal turns on the way in which the Commissioners 
settle the questions raised by these tw^o clauses. Given a broad 
commercial interpretation, the Act may do much to restore elas- 
ticity to rates, and if it does this it will be good for both the 
railways and trade. Given a narrow interpretation on the lines 
of that given to the Act of 1894, then this Act will do little to 
improve the position. It will not be long before the position is 
known with certainty. The railways have given official notice 
of their intention to increase rates for merchandise by T per cent, 
from the 1st July. There are clear indications that in many 
cases the increases will be resisted, and doubtless the Commis- 
sioners will be called on to decide between the contending parties. 

W. Tetley Stephenson 

A Keply to Mb. Acwobth’s Eeview of Professor 
C. L. Kaper’s “Kailway Transportation.” 

May I make a reply to Mr. Acworth’s review (Economic 
Journal, December, 1912) of my book, “Railway Transporta- 
tion : A History of its Economics and of its Relation to the 
State ? 

The plan and scope of a book should always be, I think, in 
view when its merits or defects are judged. It was thought best 
to make my volume a very small one — of only about 300 pages 
though it must cover a wide scope. This meant that it could 
not be exhaustive, and that each statement must include the 
maximum of fact and interpretation. Such a book must contain 
some inaccuracies and some statements too concise to be entirely 
clear when read by themselves. These limitations Mr. Acworth 


has not, I think, taken into consideration. His criticisms are, 
therefore, too severe, as I hope to show. 

He says that my statement (p. 22) “that there was really no 
effective competition between the parallel lines of railway** 
(.British, 1872) is inaccurate. Let me quote the entire sentence 
from which the above is taken : “This committee (of 1872) found 
. . . that practically no competition in railway rates existed, that 
there was really no effective competition between the parallel lines 
of railw^ay, only between the railw'ay and ocean water transporta- 
tion.** The clause which Mr. Acworth quotes should be judged 
in its setting — not as a separate sentence. If there was no com- 
petition between the railways in their rates, that of their facilities 
could not mean much to the shippers. The Joint Committee 
(of 1872) made these two statements : “United systems now exist, 
constituting by their magnitude and by their exclusive possession 
of whole districts, monopolies . . and “There can be little doubt 
that effective competition does exist betw^een places between which 
there is transit by sea.’* The Committee certainly left the impres- 
sion that the railways were largely monopolistic, and that there 
could be doubt about the existence of any “effective” competition 
betw^een them. 

Mr. Acworth is entirely correct in one criticism — that of the 
coal tonmige (British) in 1852 and 1882 (p. 27). The stenographer 
who made a typewritten copy of my manuscript left out, by 
mistake, this phrase : “from the Midlands and the north of 
England to London.” 1 examined the copy with the utmo:it care, 
but this error wi\s not detected. The sentence should read, and 
will be made to read : “The canals of England and Wales carried, 
from the Midlands and the north of England to London, 33,000 
tons of coal in 1852, only 7,900 in 1882, while for the same period 
the coal tonnage of the railways increased from 317,000 to 

Mr. Acworth thinks my statement (p. 29) that the “Briton, 
in our year of comparison (1900) travelled on an average about 
245 miles ” is incorrect. He estimates it at about 370. The 
British facts are so meagrely published, that neither of us can 
have a strong case of inaccuracy against the other ; we both can 
only make estimates. I find that “Passenger Traffic and Bates’* 
— an excellent work by W. E. Weyl — gives (pp. 88-9) the figure 
at about 245. 

Just what the exact average of actual passenger rates in Great 
Britain has been since 1897, 1 do not know. I state (p. 34 — Mr. 
Acworth says p. 24) that it has been perhaps as small as 1*75 to 




2 cents. Mr. Acworth thinks it has been between 1 and 1*2 cents. 
Here again absolute accuracy is impossible ; one can only make 
estimates. If Mr. Acworth’s figures are correct, a large part of 
all the travel has gone at a rate far below 1 cent, which I doubt. 
The four sets of fares from which he makes his average are not, 
I think, typical of the whole British service. If the British 
average (of only three classes) has been between 1 and 12 cents, 
it has been almost as small as that of the Prussian State rail- 
ways (with four or five classes), which was 1*01 cents in 1900 
and ‘89 in 1909 ; and the Prussian rates have been notable for 
their smallness. From 5 to 9 per cent, of all the British travel has 
gone first and second class, with standard rates at about 4 and 
2*5 cents, with an average of actual rates as high a; 2 cents, and 
higher. From 91 to 95 per cent, has gone at a standard rate 
of 2 cents — at an actual rate considerably smaller. Let us suppose 
that one-half of the travel has been at, say, ^2 cents, then the 
other half has paid no fare if the average of actual rates of all 
the travel has been only 1 cent ; and it has paid only ’4 cent 
if the average of actual rates of all the travel has been only 
1*2 cents. Now the fact seems clear that a very considerable 
part of the travel has paid the standard rates, and that the 
remainder has paid rates less than the standard by from about 
20 to 50 per cent. 

On p. 39 is this statement : “In the new classification and 
maxima (1891-2), a number of commodities were not specifically 
mentioned ; and upon these the railways at once advanced their 
rates over the old ones, some of which had not been changed for 
many years.” Mr. Acworth thinks that I entirely misunderstand 
what happened, and that I give the impression that the railways 
acted illegally in increasing some of their rates. What is there 
in the above statement and in the whole paragraph from which 
it is taken to suggest that I accuse the railways of illegal action? 
Most certainly they had the legal right to advance their rates, by 
any method, to the new maxima. Their method was in this case 
to delay to reissue the old special commodity rates for 2-ton or 4-ton 
lots. I am inaccurate in saying that “a number of commodities 
were not specifically mentioned ” ; the railways now charged 
certain commodities , which had been shipped at special commodity 
rates, the maximum class rates. 

Mr. Acworth cites two instances of inconsistencies : “The new 
maxima (1891-2) established standards for all class rates, beyond 
which any rate vrould be prirna facie unreasonable and illegal ” 

, . . and “The maxima were an absolute limit, beyond which 


rates could not legally go (p. 57). Are these statements, made in 
diCerent places, really inconsistent? I find that jurists assign 
three meanings to the phrase prima facie ; one is that of practical 
eg[ui valence to ipso facto. 1 make such a use of the phrase, and 
I find such a use made by the Bailway and Canal Commission. 
Again, are the following statements really inconsistent? — "‘It will 
be seen from the above table of maxima (this part of the sentence 
Mr. Acworth leaves out), that the actual rates are not much less.” 
. . . and ‘'Much of the British freight moves, not at the standard 
rates, but at special commodity rates, which are materially lower 
than the class charges ” (pp. 42~3). The first statement is made, 
as the context shows, in connection with maximum class (standard) 
rates, and does not at all refer to commodity rates (reduced rates 
granted upon the condition of larger shipments than the piece 
shipments). The second statement refers, as the context shows, 
exclusively to special (commodity) rates for larger lots, and to 
these shipments the maximum class rates really do not apply. 

Mr. Acworth thinks that I am not trustworthy in the chapters 
which treat of the United States. He cites two inaccuracies. He 
thinks rny statement (p. 187) : “There have been many thousands 
of owners of the capital of each of these groups (geographical 
groups railways), but the controlling personalities have for a few 
years been those who hold large stock in the systems known as the 
Vanderbilt, the Pennsylvania, the Morgan, the Hill, the Harri- 
man, the Gould, and the More” is incorrect. He, I feel sure, 
misunderstands the statement. It does not say, or even intimate, 
that the Pennsylvania has been dominated by Wall Street, as 
he reads my statement to say. The statement comes after one 
which tells of the geographical grouping of the railways of the 
United States, and must be interpreted in connection with it. I 
merely say that the larger shareholders of the Pennsylvania deter- 
mine for the most part its policy and management, and that it 
has powerful influence in the “Trunk Line ” territory. The fact 
that the Pennsylvania has 70,000 (75,000 is the accurate number) 
shareholders, as Mr. Acworth notes, does not mean that a com- 
paratively small number of them cannot and do not really control 
its management. The vast majority of its shareholders have no 
really active interest in its management — only in the fact that 
the system shall be prosperous so as to pay dividends. Its directors 
are, to be sure, freely elected by the shareholders, but it is also 
true that the majority of these vote in a really perfunctory manner. 
The U.S. Steel has as many as 105,000 stockholders, but a small 
number control its management. 




Mr. Acworth cites the statement that “The railways of the 
United States had in 1907 a ton-mileage approximately six times 
that of the British ** (p. 226) as proof that I am not trustworthy. 
He thinks that it was approximately eleven times. His criticism 
in this instance only goes to show that the British facts are so 
meagrely published, that even he — England’s great student of 
railways — is somewhat at sea. I note that “Eailroad Traffic and 
Bates,” by Johnson and Huebner — the most authoritative 
American work — makes practically the same mistake as I do 
(Vol. 1, p. 4). 

Since Mr. Acworth has placed his emphasis upon the chapters 
devoted to Great Britain and the United States, I have replied 
to his criticisms of these, and to the more important ones only. 

Has Mr. Acworth really proved liis case that the book has too 
many inaccuracies? Has he really proved its value as a very 
concise general statement of the economics and the poliiics of 
railway transportation less because of some inaccuracies? I would, 
however, prefer that my book be shown to be inaccurate in some* 
of its statements — yes, in many — than that I should in making 
reply show myself unfair in a single instance to Mr. Acworth. 

Charles Lee Raper. 

Let me first thank Professor Raper for the most«'<;ourteous 
tone of his reply. I trust that my criticisms embodied no personal 
discourtesy to him. If they did, I am heartily sorry. Whether 
my criticisms were “too severe,” the readers of the Journal must 
judge for themselves. Without going so far as to adopt Jeffrey’s 
attitude, Judex damnatur cum nocens ahsolvitur, I still cannot 
think that it is the duty of a reviewer to send back a book 
unreviewed because he cannot speak favourably of it. 

Having now read Professor Raper’ s reply, I do not feel able 
to withdraw what I have said. But it would not be fair to occupy 
space in the Journal by a rejoinder in each of the cases that he 
deals with. And I must leave it to anyone who is sufficiently 
interested to collate for himself Professor Paper’s original state- 
ment, my criticism, and his reply. I will, however, deal with 
just one instance, the last that he refers to. Professor Raper 

“Mr. Acworth cites the statement that ‘ The railways of the 
United States had in 1907 a ton-mileage approximately six times 
that of the British ’ (p. 225) as proof that T am not trustworthy. 
He thinks that it was approximately eleven times.” 

What I said was, not that I thought his estimate inaccurate, 


but that “on his own figures the English ton-mileage is not 
approximately one-sixth, but approximately one-eleventh of the 
American.” His own statement was: “The railways of the 
United States haul upon the whole a tonnage .practically two 
times that of the British. . . . The typical haul per ton upon all 
the railways [of the United States] was 254 miles in 1910. . . . 
It is approximately 31 to 50 miles in Great Britain.” Taking 
the tonnage as double, if the haul be eight times as long, the ton- 
mileage is sixteen times as great ; if the haul be five times as long, 
the ton-mileage is ten times as great. It cannot be approximately 
six times. 

I am sorry to say that I still think the book “has too many 
inaccuracies,” and that “its value is less” because of them. 

W. M. Acworth 

Official Papers. 

Report of an Enquiry into Agricultural Credit and Agricultural 
Go-operation in Germany. By J. R. Cahill. [Cd. 6626.] 
1913. l^p. xxxvi4'528. Price 5s, 

Non| too soon has the Board of Agriculture and Fisheries 
taken in hand the task, more than once pressed upon it, of 
ascertaining by inquiry on the spot the condition of that co- 
operative organisation of agriculture to which some foreign coun- 
tries are known to owe a prosperous state of rural economy such as 
we ourselves may well envy. The same matter has been dealt 
with before by unofficial pens. We have also had various Blue 
Books compiled by diplomatists who, in the words of the late Sir 
Dominick Colnaghi, at that time Consul-General at Florence, were 
fitted for the office neither by special knowledge nor by sufficient 
leisure. The value of such reports is trifling. The masterful 
report by Sir F. Nicholson on Co-operative Credit, indeed, stands 
out luminously as a bright success among many failures. How- 
ever, that rej^ort deals with credit only ; it was written for India, 
and conditions have materially changed since it appeared in 
print. Non-official accounts, although probably aff<5rding plea- 
santer reading, can never attempt to give such minute informa- 
tion — on laws, rules, methods, and the like — as an official 
publication has space for. But these details are just what make 
information valuable for practical purposes. 

In addressing itself to its new task our Board of Agriculture 
has rightly singled out Germany for its first inquiry. For it is 




in Germany that, up to now, co-operation in the service of agri- 
culture — and more specifically that cheville ouvrihe of all co- 
operation, as the late Leon d’Andrimont has styled it, that is, co- 
operative credit— has attained its highest level and produced the 
most conspicuous results. And the Board has been fortunate in 
securing for its research the services of so unquestionably com- 
petent and remarkably painstaking a representative as Mr. J. B. 
Cahill, who had already given proof of his capacity in several 
similar publications. There are various points which an homme 
du metier could have wished to see treated in a rather different 
fashion ; and however great be the 2)ains that the inquirei: has 
taken, and however precise may have been his study of things 
on the spot, to a certain extent his tale is bound stili to remain a 
relatio relatorum, in which the one-sided opinions of informants 
necessarily colour his judgment. TTowever, such dubiiable points 
are mere specks in the general j)roduction, which may safely be 
recommended to our agricultural authorities, our would-be 
organisers of agricultural co-eperation, and our agriculiiirisis as a 
whole, for careful study as an undoubtedly valuable and trust- 
worthy guide. 

The arrangement of the matter is likewise convenient and 
perspicuous. However, its very merit on practical grounds lessens 
its value a little in this respect that it tends, while minfftely and 
very accurately describing methods, to some extent to obscure 
underlying principles, wdiich in this case are of prime import- 
ance. The author describes methods of the “General Union,” 
the “Imperial Union,” and other “Unions ” in turn, so as almost 
to suggest that such methods may be interchangeable parts. And 
the “multitude of counsellors” of the “Imperial Union” whom 
he has consulted, seem to have inclined him rather in favour of 
that body, which has, indeed, “great battalions” to show, but 
which possesses no common principle and which recent events 
have demonstrated to be dangerously dependent upon State help. 
So it is in respect of that mere handful of rural societies with 
limited liability whose principle the very leaders of the Union 
concerned repudiate and whose methods presuppose conditions 
(such as access to the income-tax registers) which are to be met 
with only in Germany. Limited or unlimited liability, large or 
small working districts, inquiry or non-inquiry into the object of 
loans, and whatever else there may be, are all integral pieces of 
one system or another, the underlying jirinciple of which con- 
sistently determines which should be resorted to. Schulze 
Delitzsch — ^to whose services to agriculture Mr. Cahill scarcely 



does full justice — organised the people with money and with a 
knowledge of business. Hence the generally “capitalist colour of 
his system. Raiffeisen had the small man, down to the very 
poorest, distinctively in his mind. Therefore he tabooed shares, so 
far as legislation would permit, and resorted to unlimited liability 
as a substitute for ready cash — ^not by any means for the sole 
purpose of supplying financial “ cover,’’ but rather as a com- 
I)elling inducement to rich and poor alike to practise the keenest 
vigilance in respect of even the smallest transactions. The 
ambition of Haas — an ambition amply fulfilled — was to create a 
large ix)pular movement, with large agriculture prominently 
represented in it, favoured and assisted by Governments, and 
therefore ]X)litical and promoting class interests. So he was 
driven to running with the hare while hunting with the hounds. 
To what dangerous extent his societies piled an “intolerable deal ” 
of liability upon “poor ha’porth” of security, Herr Heuzeroth 
has shown in a paper read before the Budapest International 
Co-operative Congress. And the truly dramatic breakdowns of 
co-operative banks in Herr Haas’ own country of Hesse since Mr. 
Cahill wrote shows how full of danger is the system carried out on 
such lines. Those lines include the facile credit in current 
account without inquiry into its object which appears to commend 
itself to ‘Mr. Cahill, but which the best authorities view with grave 
misgivings as likely to lead to loss. It was those abuses which 
rightly led the Prussian State-endowed Bank to tighten the reins 
from 1898 onward. But in doing so it went, in its exactions 
and its ambitions, beyond what Mr. Cahill appears to have been 
told. The calamitous collapse of the Haas Central Bank has 
altered the position of things since Mr. Cahill wrote, and thrown 
fresh power into the hands of the State-endowed Bank, from 
tutelage under which the “General Union” has deliberately freed 
itself, from which the Union of “Industrial Banks,” as Mr. Cahill 
calls it, has expressed its desire to break loose, and from which the 
“Imperial Union” has laboured since 1898 to make itself 

As a trained linguist Mr. Cahill deals with German nomen- 
clature far more successfully than other authors, whose gauche 
translations are often bewildering. But it is a little to be doubted 
whether under the name of “taxed value” English readers will 
detect simple “valuation,” and under that of “caution-credit’^ 
fidelity guarantee. 

But these are trifles. Looking at the Report as a whole it 
must be pronounced a distinct success, of great value, instructive 




and illuminatinff, trustworthy and remarkably clear in its 

Henby W. Wolff 

Departmental Committee on the Night Employment of Male 
Young Persons in Factories and Workshops, liepori. 
[Cd. 6533.] 1912. Price 3d. Evidence. [Cd. 6711.J 

1913. Price 2s. id. 

The night employment of children was one of the subjects of 
the earliest Factory Act. In 1850 the i>rohibition of the eny)loy- 
ment of all young persons aged under eighteen between G p.m. 
and 6 a.m. was made absolute throughout the textile, trades. But, 
as the Factory Acts were gradually extended during the succeed- 
ing quarter of a century to other industries, exceptions were 
allowed to the normal extf'Xisiou of the prohibition. These now 
survive partly in the form oC statutory exemptions, and partly in 
the form of special orders ot the Home Secretary, which together 
have the effect of legalising the employment of boys aged over 
fourteen, or, in some cases, over sixteen, in sixteen specified 
kinds of works or processes. In 1911 an order was issued to 
permit the employment at night of boys over sixteen in the 
manufacture of artificial silk, which a German firm had decided 
to introduce into England, partly on account of the new Patent 
Act regulations. The managing director of the British company 
formed to carry out the project informed the Departmental Com- 
mittee that “the w^ork is degrading in its simplicity to full-growm 
men,” and that therefore “night employment is essential ” for 
boys. Protests were, however, made in Parliament against the 
extension of the principle of night work, and, in consequence, 
Mr. Churchill appointed a Committee to inquire into the whole 

The evidence given before the Committee contains a mass of 
interesting information wdth regard to the detailed organisation 
of the trades in question. Glass wwks appear to be the largest 
employers of boys in night work, and after them iron mills. The 
unions in the glass-bottle trade on the whole are op]X)sed to the 
raising of the minimum age for night emj)loyment. The men 
and boys generally work in groups of four or five, known as 
“holes” or “chairs,” and if labourers were substituted for boys 
in the unskilled branches of the work, it is feared that the share 
of the group’s piece-work earnings, which goes to the skilled 
“blowers ” and "gatherers,” would be reduced. But the secretary 




of a union representing the London men favoured the abolition of 
, night work for boys on the ground that it was deleterious to their 
health. In London apparently employers have taken advantage 
of the rule permitting the employment of boys at night, to engage 
them not only for the actual work of making bottles, but also to 
stoke furnaces. The evidence of another union secretary, who 
objected to any interference with the night work of boys, showed 
in a striking way th4 “ blind-alley character of the glass-bottle 
trade for boys. In five districts 1545 boys under eighteen were 
engaged in making bottles, as compared with 2053 nien over 
eighteen. Miss Sanger gave evidence on behalf of the Inter- 
national Association for Labour Legislation, which has been 
endeavouring for some time to secure an international treaty to 
prohibit the night work of boys, similar to that which already 
prohibits the night work of women. It is to be hoped that the 
conference of representatives of Governments, which is to be held 
to discuss the problem this year, will succeed in securing effective 
international co-operation. 

The recommendations of the Committee may be summarised 
as follows : (1) Withdrawal of eight out of the sixteen exemptions 
from the prohibition of night work ; (2) the raising of the mini- 
mum age for night work from fourteen to sixteen in glass works, 
iron mills, and paper mills ; (3) permission to be granted to employ 
boys up to 9 or 12 p.m. only in newspaper printing (on two days 
in the v/eek), china clay works, and electrical stations; (4) 
periodical official medical inspection of all the boys aged sixteen 
to eighteen who are still allowed to be employed at night. 

F. Keeling 

Report of the Committee of Inquiry into the Conditions of 
Employment in the Linen and Other Mahing-up Trades of 
the North of Ireland, [Cd. 6509.] 1913. Pp. xxviii + 191. 

The Eeport on the Conditions of Employment in the Linen 
and other Making-up Trades of the North of Ireland is an ex- 
tremely interesting contribution to the literature of women's 
work and wages. Many of the processes in these trades, e,g,, 
hand-embroidery, thread-drawing, machine-stitching, &re carried 
on in the homes of women out- workers in Belfast and other towns 
and villages of the North of Ireland. Very little of the work is 
really unskilled, and some of it requires a very high degree of 
skill. But both skilled and unskilled branches are carried on 
under conditions with which experience of home-work in other 
trades has made us only too familiar. Long hours of work for a 


191B] ofFidiiyL paPMM 

miserable wage, the employment of children after school hours, 
and in the country districts the abuses of thantruck system, are 
common features of the industry. i 

It is true that gross underpayment only exists in certain 
branches of the trade, and even in these branches many employers 
appear to pay fair rates. There seems, however, to be a total 
absence of uniformity in the practice of different firms. One 
worker alleged, for example, that when 'working for one firm she 
could earn at the rate of 2d, an hour, but when employed by 
another firm on exactly the same sort of work, she could only 
make a id, a hour. 

The evidence given by employers suggests that they are, on 
the whole, desirous that their workers should be able to earn a 
fair wage, (the standard of “fair” appears to ho 10.s\ or 12^?. a 
week), but sometiiues they seem io be ignorant of the amount 
which a worker of average eflficieiicy can earn ixt the piece ^ates 
paid ; in other cases the competition of the less scrupulous 
employers has forced wages down to what is admitted to bo a 
“sweating rate.” 

The principal recommendation of the Committee is the appli- 
cation of the Trade Boards Act to certain processes of the making- 
up trades. To this proposal the employers as a whole have 
offered no opposition, provided the decisions of the Boatd apply 
equally to their competitors in other parts of the United Kingdom. 


Report to the Board of Trade on the Industrial Disputes Investi- 
gation Act of Canada, 1907. By Sir George Ask with, 
Chief Industrial Commissioner. [Cd. 6603.] 1913. Price 

This Eeport is the outcome of a visit paid to Canada by Sir 
George Askwith. It is chiefly concerned with a dt^scription and 
analysis of the Canadian Act, together with some account of the 
feeling of public opinion towards it in Canada. “The simple 
purpose of the Act,” the Report states, “is to ensure the recogni- 
tion of the interests of the public, as a third party, in trade 
disputes, and the insistence that that third party, through the 
GovernnyMt, shall have a voice in regard to a dispute affecting 
their int^ests.” The Act, how'cver, is confined 

1. To industries whose uninterrupted continuance is of high 
importance to the well-being of the nation (mining, railways, 
shipping, and otuer public utilities. 

No. 90. — VOL. XXIII. 



2. To a brief suspension of the right to stop, as distinct from 
a complete prohibition of stoppage. 

Thus the Act differs essentially from compulsory arbitration. 

To quote the Keport again : “It does not destroy the right of 
employers or workpeople to terminate contracts. It legalises the 
community’s right to intervene in a trade dispute by enacting that 
a stoppage, either by strike or lock-out, shall not take place until 
the community, through a Government department, has investi- 
gated the difference with the object of ascertaining if a recom- 
mendation cannot be made to the parties which both can accept 
as a settlement of the difference. It presupposes that industrial 
differences are adjustable, and that the best method of securing 
adjustment is by discussion and negotiation.” 

In summing up at the end Sir George Askwith gives it as his 
opinion “that the forwarding of the spirit and intent oi cx)ncilia- 
tion is the more valuable portion of the Canadian Act, and that 
an Act on these lines, even if the restrictive features which aim 
at delaying stoppage until after inquiry were omitted, would be 
suitable and practicable in this country.” 

Return of Correspondence with the Bank of England and Messrs. 
Samuel Montagu and Compamj, relating to the Purchases 
of Silver in 1912, [H. of C. 100.] 1912. Price Is. 3d. 

Copy of Papers^ including Communications which have passed 
betivecn the Secretary of Stale for India aiid the Government 
of India, regarding the quesiion of the Establishment of a 
Mint for the Coinage of Gold in India. [H. of C. 495.] 
1913. Price GJc/. 

Memorandum on India Office Balances {prepared under the 
instructions of the Secretary of State for India). [Cd. 6619.] 
1913. Price 2Jr/. 

Report on the Operations of the Paper Currency Department 
during the year 1911-12. 1913. 

The first three of the above are documents published in con- 
nection with the recent Parliamentary attack on the India Office. 
The fourth, by Mr. E. M. Gauntlett, contains some valuable 
data, in continuation of Mr. Gillan’s report of last year (see 
Economic Journal, vol. xxii., p. 145), respecting the present 
position of the sovereign as a medium of exchange in India. The 
return which relates to the silver purchases has not much 
economic interest, apart from the light which it throws on the 




organisation 6f the silver market. The history of proposals for 
a gold coinage in India contains several documents of historic 
interest, especially an important despatch from the Government 
of India to the Secretary of State (August 24th, 1899), acknow- 
ledging the receipt of the report of the Fowler Committee, which 
has not, so far as we know, been published previously. The 
Memorandum on the management of the India Office balances 
makes public a good many details for the first time. The student 
of Indian financial arrangements will find all these documents 

Memorandum and Statistical Tables, showing the Productiort and 
Consumption of Iron Ore and Pig Iron, and the Production 
of Steel, in the United Kingdom and the Prmcipal Foreign 
Countries iu Recent Years, and the Imports and Exports 
of Certain Classes of Iron and Steel Manufactures, 
[H. of C. 402.] 1913. Price Id, 

To be reviewed. 

Report of the Departmental Committee to Enquire and Report 
as to Buildings for Small Holdings in England and Wales, 
together with abstracts of the evidence, appendices, and a 
series of plans and specifications, [Cd. 6708.] 1913. Price 
ll6‘. 3d. 

A DETAILED report on the best types of houses and farm equip- 
ment for small holders, and of cottages for farm labourers. There 
is a good deal of evidence as to cost from the witnesses, but the 
report does not generalise in any way about this. A sub-committee 
visited Sweden and report on what they saw. The plans and 
specifications at the end are numerous and detailed. 

Report of an Enquiry by the Board of Trade into the Earnings 
and Hours of Labour of Workpeople of the United Kingdom, 
VIII. — Paper, Printing, etc,. Trades; Pottery, Brick, Glass, 
and Chemical Trades ; Food, Drink and Tobacco Trades ; and 
Miscellaneous Trades in 1906. [Cd. 6556.] 1913. Price 

2s, 8d, 

To be reviewed. 

Statistical Abstract for Foreign Countries in each year from 1900 
to 1910-11. [Cd. 6698.] 1913, Price Qs. 

Return Showing the Average Prices of Wheat per Imperial 
Quarter in the United Kingdom, France, Germany, and the 

Y 2 


United States, in each year from 1840 to 1912, with par- 
(iculars as to rate of Import Duty leviable in . each country 
during each year. [H. of C. 46.] 1913. Price Jd. 

Return Showing for each Financial Year from 1875 to 1913 the 
total amount of Dead Weight Debt outstanding on the Ist 
April, and a similar statement in respect of other Capital 
Liabilities, with other particulars relating to the National 
Debt. [H. of C. 82.] 1913. Price Id. 

Comparative Statement of Pauperism and Cost of the Rdief of 
the Poor in certain years from 1848-9 to 1911-12. [Cd. 
6G7e6.] .1913. Price 

The following figures are extracted from the above return : — 


Ratio of 

pauperism per 1,000 

1 of population, 



Total annual 



Average cost per head. 

poor rate 
per £ of 




db s > d. 


£ s. d. 

5. d. 





7 17 8 

a 11 2 

1 8*6 






8 0 9 

4 0 2 

not known 




9 11 8 

4 5 8 

1 6-6 





9 14 10 

4 12 4 

1 2*4 





10 2 11 

4 11 4 

1 1-6 




1 1,567,649 

12 11 1 

6 6 1 

1 3*8 


8 0 



12 18 1 

6 3 10 

1 4-6 





13 16 9 

6 16 3 

1 3*9 

Current Topics 

The returns with regard to tlie working of the Unemployment 
Insurance scheme in the compulsorily insured trades, as published 
in the Board of Trade Labour Gazette, provide a new measure of 
unemployment. Since February figures have been given with 
regard to the number of men claiming benefit for each week after 
15th January, the date from which benefits became payable. The 
percentage of the number of claims to the number of Unemploy- 
ment Books issued in each group of occupations is the most satis- 
factory measure of unemployment which has hitherto been ob- 
tained. The main difficulty connected with it is the fact that 
the men who have taken out Unemployment Books are constantly 
leaving the compulsorily insured trades. Their books may or may 

1913] OtTBBBNT tUOHOS 318 

not (in accordance with the law) have been returned to a Labour 
Exchange. On the other hand, the return of the actual pay- 
ments made each week by the local offices of the Unemployment 
Fund is not a satisfactory measure of unemployment, because it 
does not inclutte the claims paid, through Trade Unions, in 
accordance with Section 105 of the Act. In February 22,641 
“indirect claims ** were made through Trade Unions, as compared 
with 65,005 “direct claims dealt with by the Labour Exchanges 
and local agencies. The corresponding figures for March are 
17,522 and 48,055. The percentage of claims made to books 
issued is markedly higher in London and the south-eastern 
counties, and in Ireland, than in the remaining six areas into 
which the country is divided. This is true not only of the 
insured trades as a whole in each of the four months January, 
February, March, and April. It applies also throughout the period 
to each of the six groups of occupations, inio \^hich the insured 
trades are divided, with a very few exceptions. The following 
table shows the percentages for all insured trades together : — 

31st Jan. 

28th Fob. 

28th Mar. 

26th April. 











Whole of United Kingdom 





It is noticeable that the lTnem])loyineiit Insurance^ percent- 
ages are considerably higher than the Trade Union unemploy- 
ment percentages in all the groups of trades in which a comparison 
can be made. 

A REMARKABLE sidelight upon the proportions of skilled and 
unskilled labour in industry is given by the classification of the 
2,297,326 Unemployment Books issued up to 1st February, 1913. 
Even after navvies and machinists of all kinds have been placed 
in the category of specific “trades/* there remain no few^er than 
722,163 “labourers, etc.,’* in the insured trades — about a 
third of all the insured persons. Only about 10,000 women are 
included in the scheme. The decisions of the Umpire, which have 
very largely placed the manufacture of accessories and parts for 
machinery and vehicles outside the category of insured trades, 
have incidentally had the effect of excluding from the scheme 
some thousands of women engaged in the metal and cycle trades. 
The Umpire has had a difficult task, and his decisions have already 
attained to the dimensions of volumes. It involves no criticism 
on his work to express the hope that the complicated frontier 
between insured and uninsured occupations, which he has felt 
obliged to establish, will be rounded off at an early date by orders 



of the Board of Trade bringing within the scope of the scheme 
occupations, now excluded, which are, so far as the workman is 
concerned, identical with those already included within it. 

The scheme has undoubtedly encouraged some Trade Unions 
to pay unemployment benefits, where they did not do so before^ 
It was anticipated that Unions, which formerly paid unemploy- 
ment benefit, would use the grant of seven shillings from the 
Government’s Unemployment Fund to reduce their own liabilities 
in meeting claims — possibly lowering their rates of contribution. 
But some important Unions, such as the Amalgamated Society of 
Engineers and the Scientific Instrument Makers, have added 
the seven shillings provided under the scheme to the benefits 
formerly paid, so that many of their members can now draw sums 
approximating to^ a pound a week during unemployment. The 
arrangements under Section 105 of the Act, for payments of benefit 
to Trade Unionists through their societies, are almost necessarily 
somewhat complicated. Many of the branch secretaries of the 
Unions have experienced difficulty in fulfilling the Board of Trade 
requirements with regard to the filling up of forms, etc. Accounts 
from different, parts of the country seem to show that the Courts 
of Eeferees are inclined to be generous to the workpeople against 
whose claims to benefit the Insurance Officers have raised objec- 
tions. One of the acutest hardships caused by the drafting of 
the scheme arises out of the definition of “continuous unemploy- 
ment “ given in section 107 (1). This undoubtedly is not suffi- 
ciently elastic to enable casual ship-repairers and others to obtain 
the benefits, to which they would seem to be equitably entitled. 

Our South African correspondent writes as follows with 
reference to Mr. Morgan Eees’s article in the March number of 
the Economic Journal : — Mr. Morgan Eees has given an in- 
teresting comparison of wages and cost of living in South Africa, 
referring especially to Johannesburg : but some of the figures need 
modification on account of the recent changes. Cost of living, at 
least in Johannesburg, is falling, because the increase in popula- 
tion and the growth of more settled conditiq^ outweigh the influ- 
ence of the w^orld-wide rise in prices. Thus, as to food : the diet 
mentioned on p. 135 should not cost more than 30^. per week ; 
there are good restaurant meals to be had at a shilling — breakfast) 
lunch, or dinner ; and full board for a workman at one of the 
mines, where things are done particularly well, costs £6 a month. 


CBBEBirr Clones 


Meat and vegetables are cheaper than in England, and probably 
the whole cost of food is very little greater. Rent is still excessive, 
but not quite so extravagant as Mr. Kees states. A good foxlr- 
roomed brick cottage, with kitchen and bathroom, suitable for 
an artisan’s family, can now be built for £500 (according to in- 
formation kindly supplied by the town valuer), and the land 
needed ought not to cost more than £60 at the most. On the mine 
referred to above, the rent of a workman’s cottage is from £3 to 
£5 a month, while single rooms are let to miners for lO^v. a month. 
In the suburbs the rent of the cottage should be £5 or £6 a month. 
Johannesburg is a professional and businessman’s town’ rather 
than a workman’s, and the cost of living to the middle classes, 
though high, is not quite what it is usually put at. For example, 
board at a good club costs about £10 a month ; one can get lunch 
in town for l5. 6d. to 2s, 6d. ; kaffir servants (who do as much 
work as English ones) mostly get £3 a month ; and a man who 
settles in the town and builds his own house, would find a little 
suburban villa in a quarter acre of garden cost for interest, depre- 
ciation, rates, and water about £80 to £100 a year. An interesting 
aspect of these figures is the way in which they indicate the 
approximation that is taking place between England and one of 
the colonies. The approximation is noticeable both in^ wages and 

“W.J.A.” writes: Among the discussions in the Economic 
History sub-section of the International Congress of Plistorical 
Studies, held in London in April, one of the most instructive was 
that introduced by Professor Schafer, of Berlin. It was apropos 
of the publication, now on foot, of the records of dues paid at 
Ivronborg by ships passing the Sound. Professor Schafer j)ointed 
out that the Sound w^as for centuries the most frequented maritime 
thoroughfare of the world ; and as the records are extant for the 
years 1497, 1503, 1528, 1536-1547, and from 1557 almost complete 
to the abolition of Sound dues in 1857, they constitute an exceed- 
ingly valuable, though hitherto hardly used, source of information 
for the history of commerce and shipping. A volume i)reBenting 
in tabular form the information as to number, ownership, and 
origin of the shipping, for the period ] 497-1660, was published 
in Copenhagen in 1906, under the editorship of Mrs. N. E. Bang 
(Tabeller ooer Skibsfart og Varetransportj etc.) ; and a second is 
about to appear, dealing with the nature and value of the cargoes 
for the same period. For these the cost has been borne by a 
certain Carlsberg Fund at Copenhagen. From 1660, however, 
the information concerns other countries far more than Denmark, 


especially as Danish ships paid nothing ; and the Danish fund is 
no longer available. The energy of Professor Schafer, who has 
done so much for Hanseatic history, has already got together, from 
various Governments, municipalities, societies, and individuals on 
the Continent, a sum sufficient to pay for the tabulation and 
printing of the material down to the year 1800. But before the 
editorial staff is disbanded, a complete job ought to be made of 
the whole business down to 1857. Here is an opportunity, as 
Profesor Schafer justly represented, for Elngland to take its fair 
share in an international enterprise which, after all, concerns its 
own past history very vitally. A certain modest amount of help 
has already been given by and through the British Academy. 
But much more ought to be done. Perhaps it is hopeless to expect 
even a small grant from our Government, which, curiously enough, 
usually takes up a more narrowly official and cautious attitude in 
such matters than the more bureaucratic Governments of the 
Continent. But there ought to be British shipowners to whom 
the project commends itself ; and Professor Dietrich Schafer, 
Friedrichstr. 7, Steglitz, would gladly give further information. 

It is not possible at present to do more than indicate the 
provisionaLprograrnme of the section for Economics and Statistics 
at the meeting of the British Association to be held at Birmingham 
from Soj)tember 10 to 17. The presidential address will be de- 
livered by Ilev. P. IT. Wicksteed, who is president of the section. 
With reference to the sectional proceedings, the experience of 
recent years has shown the advantage of endeavouring to concen- 
trate discussion on certain topics. By this method the objection to 
which such gatherings are subject (namely, the disconnected 
nature of the papers and discussions) is obviated to some extent, 
and a day can be assigned to a specific topic instead of the 
morning being divided amongst some four papers on distinct 
subjects. By the former method, too, a longer time can be 
given to speakers, who, in some cases, are invited by the com- 
mittee to take part in the debate. One debate for which it is 
proposed to arrange a day will probably be on some aspects of the 
cost of living, to which Professor Bowley and Mrs. Wood are 
likely to contribute papers. Considerable local interest has been 
shown lately in the question of canal navigation, and a day has 
been allocated to this subject. There will be papers by Lord 
Shuttleworth,. Sir John P. Griffith, Mr. E. B. Dunwoody, and 
others; and Sir John Brunner, Mr. Neville Chamberlain, Mr, 
Frank Impey, Mr. Frederick Morton, and Mr. J. F. Saper ai’^ 

1913} tropics 317 

expected to te able, to join in the discussion. It is also proposed 
to deal with the position and exposition of economic theory from 
the point of view of related studies and activities. In recent years 
theoretical, and in particular mathematical, economics have 
not been prominent at these meetings ; but at Birmingham the 
latter will be represented by a paper from Mr. A. J. Kenny, 
of Birmingham University, entitled, “How far are Mathematical 
Methods really of use in Economic Science?” It is hoped that 
some theoretical papers may be arranged for later. Professor 
Oldham will read a paper on “ The Study of Business Organisa- 
tion,” and Professor Kirkaldy on “The Economic Effects of the 
Opening of the Panama Canal.” The drawing up of a pro- 
gramme for this meeting is always something of a proolem. The 
object of the Association is to encourage contributions (either in 
the form of suitable papers or by discussion) from those who are 
not professional economists, while, at the same* time, an endea- 
vour should be made to attract the specialist by providing dis- 
cussions of interest to him ; and finally, there are the claims of 
the general body of members of the Association who desire to 
obtain some competent guidance on those economic questions 
which occupy their attention at the moment. P^ven when an 
equilibrium has been discovered between these aims, there is still 
the difficulty of finding an ideal distribution of the a^tiilable time 
between the papers and speakers that turn out to be available 
at the meeting. All that can be said is that these various com- 
peting claims have, at least, been kept carefully in view by the 
committee of the section. 

The Societe d'Economie Politique of Paris announce that the 
subject has been changed in the competition (announced in the 
Economic Jouenal, December, 1912, p. 644) for the prize 
founded by M. P^mile Marcet, and an extension of time granted. 
The subject of the competition is now “ The Evolution of Protec- 
tionist Ideas since 1815.” The prize will consist of a gold medalj 
worth about 300 francs, and a money payment of 1,000 francs. 
The manuscripts (in French) should be sent before December 
31st, 1914, to M. Daniel Bellet, 18 Eue des Canus, Maison- 
Laffitte (Seine-et-Oise), from whom further particulars can be 

We regret to announce the death last month in his seventy- 
second year of M. Alfred de Foville, perpetual secretary of the 
Acad4vw de$ Sciences morales et politiques. An obituary notice. 



[JUNE, 1918 

of M. de Fovilte will appear in the September number of the 
Journal.^ His death, following so soon after the recent deaths 
of MM. Levasseur, Molinari, and Passy, to the youngest of whom, 
however, he was twelve years junior and to the oldest twenty-three 
years junior, marks with further emphasis the passing away, after 
an unchallenged reign of nearly fifty years, of the old-fashioned 
school of French economists. 

Appointments. — Mr. J. Eadie Todd, M.A. (Edin.) and B.A. 
(Oxon.), formerly lecturer in Economic History at Edinburgh 
University and lately lecturer at McGill University, has been 
appointed Professor of History and Economics in the University 
of Dalliousic, Halifax, Nova Scotia. 

Mr. A. N. Sliimmin, M.A., has been appointed an Assistant 
Lecturer in Economics in the University of Manchester. 


Economic Review. 

April, 1913. • Trade Unions^ Trade Lists, and the Law. Prof. 
W. M. Geld ART. The Housing Question. Dr. T. C. Fry. Co- 
partnership and Labour. L. V. Lester-Garland. India and 
the Sugar Convention. D. A. Barker. Outdoor ReJirf. C. F. 
Bogers. Dr. Carlyle on Wages. Prof. Edwin Cannan. A long 
and severe review. Prof. Ashley discusses Prof. 1. ]^1sher*s 
various recent articles, and Mr. Sidney Ball reviews at some 
length Prof. Pigou's Wealth and Welfare. 

Statistical Journal. 

February, 1913, The Population of E^igland in the Eighteenth 
Century. E. C. K. Gonner. A learned study of tli’fe authorities. 
Note on Urban and Rural Variations according to the English 
Census of 1911, Thomas A. Welton. A study of the recent 
“tendency towards loss of population by migration in the case 
of several of our largest cities.” 

March, 1913, The Panama Canal and Competition for Trade in 
Latin America, the Orient, and Australasia. Prof. Lincoln 
Hutchinson. Prices of Commodities in 1912, A. Rauerbeck. 
The Rate of Interest on Investments in 1912. 11. A. JiEHFELDT. 

Prof. Lehfeldt brings the calculations of a former article up to 

April, 1913. An Account of an hiquiry into the Extent of Economic 
Moral Failure among certain types of Regular Workers. D. C. 
Jones. The results of circularising certain public and private 
employers in regard to the nunjher of employc'.os dismissed, and 
the relative importance of different causes of dismissal. 

Bankers' Magazine. 

March, 1913. Bank Work from a Junior Clerk's Standpoint: Col- 
lection and Payment of Cash Articles. A very useful account 
of the machinery and technique of the Clearing House. 

April, 1913. Balance-sheets of Banks in the United Kingdom 
during 1912. 

May, 1913. Proportion of Cash to Deposits of Banks in the United 
Kingdom during 1912. Canadian Banking in 1912. H. M. P. 
Eckardt. a valuable summary of the banking position and of 
current banking history in Canada. 




/ . : Women's Industrial Jt^ews. 

April, 1913. The Tea-shop Girl (15 pp.), Barbara Drake. An 
interesting report of an Inquiry undertaken by the Investigation 
Comniittee of the Women’s Industrial Council. 

Bulletin of the British Library of Political Science. 

January, 1913. This is the first number of a new quarterly Bulletin 
dealing with the library attached to the London School of 
Economics. Each number contains lists of the principal recent 
accessions, of some of the principal desiderata, and of duplicates 
available for exchange. In addition, there is to be a series of 
Selected Bibliographies. I. The Bibliography of the Nationalisa^ 
lion of the Coal Supply. 

April, 1918. Selected Bibliographies. II. Bibliography of the Civil 
Service. Miss W. C. Hill. 

Quarterly Journal of Economics (Harvard). 

February, 1913. A Compensated Dollar. Irving Fisher. Prof. 
Fisher pursues his now familiar theme. The Organisation of the 
Boot and Shoe Industry in Massachusetts before 1875. Blanche 
E. Hazard. The Locomotive Engineers' Arbitration: its Ante- 
cedents and Us Outcome. L. J. Cunningham. The Decision on 
the Union Pacific Merger. Stuart Daggett. F rank f orUon- the - 
Main: a Study in Prussian Communal Finance. II. Anna 
Youngman. Eaihvay Rates and Joint Cost Once More. F. W. 
Taussig. A criticism of the views advanced on this subject by 
Prof. Pigou in Wealth and Welfare. 

American Economic Review (Boston). 

December, 1912. The Definition of Price. Frank A. Fetter. A 
very large collection of the definitions proposed by various 
authors in the last 100 years. Prof. Fetter favours a defini- 
tion which is without reference to money. Transportation and 
Competitio7i in South American Markets. H. Parker Willis. 
The Impatience Theory of Interest. Henry K. Seager. A 
criticism of Prof. Irving Fisher. Agriculhiral Credit in the 
United States. E. W. Kemmkrer. A discussion of how far the 
National Banks can, under the existing law, serve the needs of 
the farmer, and how far the adoption of a Co-operative Credit 
System might prove useful. 

March, 1913. Objections to a Monetary Standard Based on Index 
Numbers. David Kinley. A criticism of Prof. Irving Fisher’s 
proposals. Aj^art from the point that a unit of money would be 
maintained by Prof. Fisher’s plan at an equivalence with a 
fixed quantity of goods, but not with a fixed quantity of utility, 
Prof. Kinley ’s criticisms arc based on a theory of money which 
would not commend itself to those who are in c.,ny sort of general 
agreement with the monetary logic underlying Prof. Fisher’s 
proposals. Prof. Kinley lays stress on the importance of know- 
ing the precise cause of the rise of prices, whether due to varia- 
tions in the supply of money or of goods or to a changed rapidity 
in the sale of goods or in the volume of credit, before attempting 
to remedy its consequences. The Commerce Court Question* 

1913] mourn -pebiodicaiiS Am mvr boobs 8^1 

Samuel 0, Punn. Methods of Business Forecasting based on 
Fundamental Statistics, Jambs H.- Bbookmike. Deals with 
thd methods ox Jevons, Benner [an Ohio farmer, author (in 1875) 
of Book of Prophecies] , Babson, and Irving Fisher. The Tariff 
Board and Wool Legislation, W. S. Culbertson. 

March, 1913, Supplement. Papers and Proceedings at the 25th 
Annual Meeting of the American Economic Association, Popu- 
lation or Prosperity, Frank A. Fetter. Presidential address 
on the current importance of Malthusian ideas to the United 
States. Standardising the Dollar, Irving Fisher. Followed 
by an interesting and critical discussion. Banking Reform in 
the United States. E. W. Kemmeker. Both the paper and the 
discussion which followed it contain interesting evidence of 
the present state of public opinion in the United States* towards 
the proposals of the Monetary Commission. Theories of Distri- 
bution. Bound Table Discussion opened by Prof. Patten. Farm 
Management. Bound Table Discussion. Frontiers of Regulation 
and What Lies Peyond. John M. Clark. A criticism of the 
policy of peniiilting monopoly, subject to price regulation by 
Government. The Ecoyioniics of Qovernpicntal Price Regula- 
tion. Chester W. Wright. 

Political Science Quarterly (New York). 

March, 1913. The Tariff Board’s Wool Report, L. D. H. Weld. 
Recent Tax Reforms Abroad. III. E. B. A. Seligman. Mainly 
concerned with Australasia. 

Annals of American Academy (Philadelphia). 

January, 1913. A series of articles on Canadian National Problems, 
including: — Reciprocity. Clifford Sifton. Canada and the 
Preference, S. M. Wickett. Mineral Resources of Canada. 

G. A. Young. Canadian Banking. H. M. P. Eckakdt. 

March, 1913. A series of articles on Prison Labour. 

Journal of Political Economy (Chicago). 

February, 1913. A series of articles on Schools of Commerce in 
American Universities, including Chicago, the Wharton School, 
Dartmouth College, and Wisconsin. Canadian Banking Legisla- 
tion, S. B. Weaver. An account of the provisions of a new 
Bill introduced at the end of 1912. 

March, 1913. Further articles on Schools of Commerce, including 
the North-western University School and the Boston High 
School, and on the value of “vocational training ” in Cormnerco. 
The Industrial Training and Placing of Juveniles in England, 

H. Winifred Jevons. A summary for American readers of what 
has been done in England. 

Bulletin of the U.S. Bureau of Labour (Washington). 

No. 101. Care of Tuberculous Wage-earners in Germany. 

No. 102. British National Insurance Act, 1911. 

No. 103. Sickness and Accident Insurance Law of Switzerland. 

No. 104. Lead Poisoning in Potteries, &c. 

No. 105, Parts I. and II. Betail Prices, 1890 to 1911. 

No, 106, Parts I. and II. Betail Prices, 1890 to June, 1912. 




Revue d* Economie Politique (Paris). 

MxtueH-ApRiL, 1913. Quelques remarquea sur la rente du Bol urhain. 
Achille Loeia. Le Chemin de fer tranaafricain. Lea conclu- 
sions d*iine mission d* etudes. Ji. Leoouez. La loi soudanaise 
sur Vappreniissage. E. Maunieb. 

Journal des Economists (Paris). 

February, 1913. La Banque d*Angleterre, F. Huth Jackson. 
Eeprinted from Lectures on British Commerce. 

M.aroij, 1913. Tyhnpcrialisme economique. Yves Guyot. Le 
Prohlemc du credit. W. W. Carlile. 

April, ]9J3. J/Ecolc aulrichienne d* economic politique. Feilbogen. 
Tliis article (one of a long series) deals with Schumpeter. La 
Situation economique et financiere de V Italic. Auguste 

Pawlowski. jy Octroi de Paris. Lc passe. Le present. 
L'avenir. (30 pp.) P. de Biermont. 

Picvuc^ Eepnomique Internationale (Brussels). 

February, 1913. La Reforme fiscale en Belgique. G. Bigwood. A 
discussion of the Belgian budgetary arrangements by a professor 
in the University of Brussels. 1/ Italic economique pendant 

Vannee de la guerre. G. Nicotra. La Crise charhonniere en 
liussie. M. Lanwiok. 

March, 1913. La Revision des Tarifs en Amerique. Ch. A. Conant. 
La Ilausse du Taux de Vint (Wet ei la Hausse des Prix. Ch. 
Eist. ,, In distinction from A Stockbroker, whose article in the 
Economic Journal he cites, Professor Eist emphasises the world- 
wide universality and simultaneity of the recent rise in the rate 
of interest. Ho ascribes it to the high level of industrial 
profits, which, in its turn, is the direct result of high prices. 
La Convvniion du SainUiRHhard. A. Gobat. L’ Industrie 

Agricolc en France. M. Lair. La PtUiodicitc des Disettes en 
Russie. B. Ciilepner. The periodicity of lean years in Eussia 
may be interesting to students of similar phenomena in India. 

April, 1913. Le port de (land. Cn. Chkistophe and M. De Beer. 
Lcs fact curs (conomiques de V exportation des Capitaux Beiges. 
Max L. Gerard. Contains some statistics of the rate of interest 
payable on new emissions in Belgium, compared to those lately 
worked out for England by Prof. Lehfeldt in the Statistical 
Journal. Les Maximes fondamcntalcs du Regime des chemins 
de fer dc VEtai. Chevalier de Wittik. A general discussion of 
priucij)lcs. La Plausse des Prix. J. Pazousek. Emphasises, 
with the hoi]) of some statistics, the part played by the great 
growth in the use of cheques and notes in all European countries. 

Archiv filr Sozialwissenschaft und Sozialpolitik (Tubingen). 

January, 1913. Neuorieniicrung in der Sozialpolitik ? Prof. Alfred 
Weber. Zur liistorischcn Analyse des Patriotismus. I. Egbert 
Michels. Emphasises the comparatively late development of 
the Y at crland she griff ; concluded in the March number. Die 
Arbeit steilung im geistigen Icben. Willi Hellpach. Die neueste 
Entwicklungdes Syndikalismus. Christian Corn^ilissen. Deals 


to a large extent with last year’s events in England. Die Juden 
und dae Wirtschaftsleben (pp. 64). J. Guttmann. A searching 
criticism of Professor Sombart’s book. Die Kaufkraft des Ocldea. 
1. W. Egoerschwyler. a full analysis and criticism of 
Professor Fisher’s ** Purchasing Power of Money ” ; concluded in 
the March number. 

March, 1913. Die naturphilosophischen Orundlagen der Wirtschaft8'‘ 
theorie. Prof. Bulgakoff (of Moscow). Zur Sysiematik der 
Lohnmethoden, K. Kumpmann. Peir oleum -Monopol. Ueher 

die Fortschriite der gcsetzUchen Begelung der Arbeits: 2 eif in 
Frankreich. P. Louis. Die neue wohnungspolitische Oesetss- 
gebung Oesterreichs. Karl Forcheimer. LUeraiur zuvi Petro- 
leummonopol, T. M. Vogelstein. Der Gehurtenriickgang , 
S. Budge. A discussion of the ihoories of Prof. Julius Wolf. 

Jahrbucher filr Nationalokonomie und Statistik (Jena). 

February, 1913. Zur Agrargeschichie Schwedens im fruheren 
Mittelalter. Karl Willgren. Die deufsche soziale Qc^etz- 
gebung und der Geld- und Kapitalrnarkt. Hans Hilbert. Bin 
neuer Verauch zur Retfung des Malihns* Julius Wolf. 

March, 1913. Das neue Privilegiun der Oesierreichisch-vngarischen 
Bank. B. Zuckerkandl. Wandlungen und Fjniwicldungsien- 
denzen in der deutschen Answandcrung . W. Monckmeier. Der 
Aufschwung der Fahrikindusirie in Kanada, C. Berger. 

April, 1913. Der Kommunale Wohnungsnachweis. M. Busch. 
Das Leuchidl-monopol des Deutschen Reiches. E. Schmidt. 

Jahrbuch fur Gesetzgebung, Verwaltung und V olkswtrtschaft 


Part IV., 1912. Theorie des Sparens and der KapUalhildung 
(78 pp.). B- Liefmann. Der prcussische Staatsschatz und der 
Reichskriegsschaiz. L. Katzenstein. The history and the prin- 
ciple of the German war-chest. Bin Vorschlag zur Reiclisbcsiiz- 
steuer. L. Sevin. Das Wirtschaftsleben der Vcrcinigien Siaaten 
im ersten Jahrzehnt des 20. Jahrhunderts. E. Sciiultze. 
Agrarverfassung und Grundsteuer in British- Ostindien (GO pp.). 
V. V. Leyden. A summary mainly derived from second-hand 
and out-of-date authorities. Nordarnerikanische Vniversiidtsein- 
richiungen, G. S. Fullerton. 

Zeitschrift fiir Volkswirtschaft, Sozialpolitik und Verwaltung 


Part I., 1913. Bine dynamische ** Theorie des Kapitalzinses 
(pp. 62). E. VON Bohm-Bawerk. A discussion of a theory of 
Schumpeter’s. Die handelspolitischen Beziehungen Osierreich- 
Ungarns zur Tiirkei. Otto Hecht. Vilfredo Pareto* s Manuel 
d*4conomie politique, Knut Wicksell. A criticism. 

W eltwirtschaftliches Archiv (Jena). 

January, 1913. This is the first issue of a new quarterly Journal, 
under the editorship of Professor Bernhard Harms of Kiel. The 
subscription to each volume, complete in two parts, is 20 marks; 


the part now issued contains 876 pp. It is described as a Zeit- 
Bchrift fiir Allgemeine und Spezielle W eltwirtschaftalehre^ and 
is 150 deal with the economics of international relations in all their 
aspects. W cUwirtschaft und Weltwirtschaftslehre. Bernhard 
Harms. This article is in the nature of an introduction to the 
Journal. Individuumund Welt in der Neuzeit. E. Tonnies. Die 
WeltapuT der Eisenhahnen. K. Thiess. Das internationale 
Wechselrccht. E. Meyer. Die Serversicherung im Weltverkehr, 
E. Eitger. Die Internationale Organisation des Frankfurter 
Metallhandcls. E. Liefmann. A large amount of space is 
devoted to brief reviews and notes on new books, and to 
Kollektivhcsprechungen, of which this number contains f — 
Bibliographic relative au Commerce exterieur de la France, M. 
Bellom. Ncuerc britischimperialistische Liieratur, E. Hoff- 
mann. Die 7virtschaftlichen Beziehungen Spaniens zum latein- 
ischen AmeriHa in der neucren spanischen Liieratur. F. Bernis. 
Finally the number concludes with 35 pp. of monetary and 
financial statistics, InicrnationaLvergleichende Statistik des 
Geldmarldes der Bdrsen und der Warenmarkte, August^ Sep- 
temher, October, 1912, which are exceedingly valuable, and by 
including a number of extra-European countries cover a much 
wider field than any other available source of reference. The 
value of these statistics would be enhanced if they could be 
published less than three months in arrear. 

Scientia (Bologna). 

March, 1913. Wert und Mchrwert. I Teil: Die MonopoUTheorie des 
Mehr^wries. F. Oppeniieimer. Much concerned with what 
happens when Robinson lebt mit Freitag in gcnossenschaft- 
lichen Wirtschaftsverbande.” 

May, 1913. The above article is continued, — 11. Toil: Kritik der 
Marx schen Thcorie des Mehru'crfcs. F. Oppenheimer. 

Giornalc degli Economisli (Rome). 

February, 1913. Sulla distrihuzione della proprieid in Sicilia. G. 
Bruccoleri, Gli odierni aspeiti delV cconomia agraria: le com- 
binazioni dci faitori produitivi, G. ni Nola. The law of dimin- 
ishing returns is discussed. Le origini del banco giro. E. 

March, 1913. La teoria del mcrcato moneiario. M. Fanno. With 
Fisher, basing interest on “impatience,” and in accordance with 
his own recent volume, the writer exhibits the relation between 
the rate of interest and the prices of instrumental goods and 
other points of monetary theory. Messina: come vive. G. 
Mortara. a description of economic conditions in Messina 
since the earthquake. La statistica della disoccupazione. G. 
Montemartini. On methods of measuring unemployment. 

April, 1913. 11 fnassimo di UtilHd per una collettivitd in sociologia, 

V. Pareto. An attempt to overcome the difficulty of compound- 
ing “ ophelimities ” pertaining to different persons. Le variazioni 
periodiche dello sconio. G. del Vecchio. Referring to Jevons 
and certain precursors, the writer describes different kinds of 
monetary tides. L'annuario Statisfico lialiano per il 1912. G. 






Chapman (S. J.). Elementary Economics. London : Long- 
mans, Green. 1918. Pp. x-i-169. 

[This is a very elementary text book, probably intended for schoolboys. Professor 
Ohapman's recent Outlines of Political Economy is described as a continuation of it. 
At the end of each chapter there are questions with hinttf for solution. To be 
reviewed.] A 

Higginson (John Hedley). Tariffs at Woiff An outline of 
practical tariff administration, with special reference to the United 
States, and Canada. London: P. S. King. 1913. Pp. xiv-f-136. 


[To be reviewed.] 

Hobson (J. A.). Gold, Prices and Wages: with an examination 
of the Quantity Theory. London: Methuen. 1918. Pp. xi + 181. 
3fi. 6d. net. 

['* This work controverts current doctrine that attributes the sole or principal 
causation to the increased ouiput of gold.” To be reviewed.] 

Keltie (J. Scott), Edited by. The Statesman’s Year-Book. 
1913. London: Miicmillaii I9i3. Pp. xcvi + 1452*. 10s. 6d. net. 

fFiftieth Year. In this jubilee volume “ an attempt has been made in the 
iuaroduotory matter and in the maps to indicate the contrast in certain aspects of 
the states of the world between fifty years ago and tiow.”1 

Mann (J, E. F.), Sievers (N. J.), and Cox (H. W. T.). The 
Beal Democracy. London: Longmans, Green. 1913. Ppxi + 27r). 
48. 6d. net. 

[“Offeree members of the Rota Club, in these its first Essays, have sought to 
explain and defend the principle of Property.” They oppose the present .state of 
affairs. But they also oppose Collectivism or Socialism, and Syndicalism. To be 

Marriott (J. A. IL). The French Bevolution of 1848 in its 
economic aspect. Vol. 1. : Louis Blaiie’s Organisation du Travail. 
Vol. II, : Emile Thomas’s Hisloire des Ateliers nationaux. Oxford * 
The Clarendon Press. 1918. Pp. xeix -f 284 + 395. 

[The original French texts are here edited with an introduction critical and 
historical. To be reviewed.] 

Peel (Hon. George). The Tariff Beforaiers. London: Mothutin. 
1913. Pp. vi+188. 28. 6d. net. 

[An entertaining history of the politics of Tariff Reform from an unfriendly 

Penson (T. H.). The Economics of Everyday Life: A first 
bock of economic study. Part T. Cambridge : Tiie IJni versify Press. 
1913. Pp. xiii + 176. 38. net. 

[An elementary text book intended for schoolboys or others who are taking up 
the subject for the first time. This volume is described as Part I and does not 
cover the whole subject. To bo reviewed.] 

Collins (E. A.). Leasehold Enfranchisement: the case for and 
against a practical scheme. London : P. S. King. 1913. Pp. 
117. 28. 6d. net. 

[« The author’s object is to show the serious effect which the present leasehold 
system has upon the building trade of the entire country.” To be reviewed.] 

Webb (Sidney and Beatrice). English Local Government: The 
Story of the King’s Highway. Ijondon : LongmauB, Green. 1913. 
Pp. x + 279. 78 . 6d. net. 

[Reviewed above. ] 

No. 90, — VOL. XXIII. Z 




Withers (Hartley). Money-Changing ; An Introduction to 
Foreign Exchange. 1-ondon : Smith, Elder. 1913. Pp. viii -1-183. 
T)*. net. 

[The outcome of lectures lately delivered to members of the Institute of Bankers. 
To bo reviewed.] 


Bl\kt:y (I.konard Stott). Tlie Sale of Liquor in the South. 
Now Yo?‘k : Colunilua Univt'rbity IVosK. 1012. Ito. Pp. 56. 4^. 

\CQlnmhi(t Vniversity Studies, 127. “The History of the Development of a 
Nonna] Social Restraint in Southern Commonwealths.”] 

Clark (John Jjatks) and Clmuc (John Maijrk^k). The Control 
of Trusts. NfW York: The Macmillan Co. 1012. Pp. ix + 202^ 
4 Hr ()<]. net. 

[Rewritten and enlarged by Prof. Clark with the oollahoration of his son. To be 

Cleveland (IhiEDEHicK .\.) and Powell (Fred Wilbur). Rail- 
road Finaiiee Niov York . D. .\p])h‘ton. 1013. Pp. 463. 10/?. (Scl. 


[‘* The puppoRC /)f this volume is to describe the methods of financing Railroads 
in the United States.” To be re\iewed.] 

C'oPELAM) (Melvin Thom\s) 'T1u‘ (’ottou Manufacturing Industry 
of the Cuited Stales. Cambridge' (U.S.V.). Harvard University 
Press. 1012. Pp. xii-hH5. $2. 

[Harvard Econoinif Studies VI 11. Reviewed above.) 

Davis (William Watson). Th<‘ Civil War and Reconstruction 
in Rlorida, New York (’olumbia Univ(‘rsity Pioss. 1013. Pp. 
xxvi-f,769. 16.S*. 

[Columbia Vnivositji Studie.s, i:!! The ejfe<‘t ot th(‘ Civil War on a slave- 
owning State.] 

Rarnam (Hi:nr\ W.). 'Fbe Ee.onomie Utilisation of History. 
N(‘W Hav(Mj : Yale UniversitA Press, 1913. Pp. viii’h220. $1.25, 

[This volume of reprinted essays takes its name from tiie first. Several of them 
deal with labour legislation. To he reviewed.] 

Ford (James), (’ooju'iation in New Fjiigland, Urban and Rural. 
New York : Survey Associate's. 1913. Pp. xxi + 237. $1.50, 

[Published by tlic Russell Sage Foundation. Reviewed above.) 

Klee('K (Maky van). Woinon m tht' Bookbinding Trade. uNew 
Yoik: Surv(‘y Assoeiates. 1013 P]>. xn + 270. $1.50. 

[A publication of the Russell Sage Foundation j 

Koo (Vi Kvpin Wellington). TIk' Status of .Miens in Cbiria. 
New York: Cohmiliia UniAorsitv Ih'ess. (l^ondon: P. H. Rin^,) 
1912. Pp. 359. lO.s. 

[By the English Secv.-lary to tlie Prosidont of China. ColuwhUx Universifu 
Studies, 120.) ' 

McCabe (Dvaid A.). Tbo Standard Bute in American Trade 
Unions. Baliiinoit' : Juhns Ho])kins Ihvss. 1912. Pp. 251. $1.25. 

[Johns Hopkins Cnivei sitjf Studies in Historical and Political Science, xxx-ii. 
To be revii'wod,] 

OGBUitN (WiLidAiM F.). Progress and Uniformity in Cbild-Labonr 
Legislation. Ne\v Y(')rk • Cohinibia Uiiiversitv Pn ss. 1912. Pp 
219. 7.SL * ^ 

[Columbia University Studies, xlvn in. A studv of State leffislation 
oil child-labour in the United States.) 




liOBiNbON (K. V.). jiailroad Taxation in Mimiosota : Analyaiis 
oi the Gross Earnipgs Tax. St. Paul, Minnesota. 1912. Pp. 58. 

K ^uted from the third biennial report of the Minnesota Tax Couunission. 

Kobinson (E. V,). Tile Cost ot Government in Minnesota. 
St. Paul, Minnesota. ^ 1912. Pp. 343. 

[Eeprinted from the third biennial report of the IMinncsota Tax Commission.] 
Seligman (Edwin R. A.). Essays in Taxation. Eighth Edition : 
completely rc'vised and enlargi‘d. New York: The ]\Iuemillan Co. 
1913. Pp. xi+707. 17«. net. 

[This book was originally published in 18115 (reviewed in the EeONOMii; Journal, 
vol. vi, p. 81), but, until the present, subsequent editions have not l)eeii 
substantially revised. The present edition, however, has boon much enlarged and 
considerably rewritten. To be reviewed. ) 

Streigiitoff (Frank Hatch). Tlu* Hist ’'ihul ion of InooincH in 
llio United States. Now York: Colombia CniM'i'ity Press. 
(London: P. S. King.) 1912. Pj>. 171. 

[Columbm University /ics, 1‘29. To be reviewed.] 

Wolfe (F. E.). Admission to .Vnuo’iean Ti’adc* Unions. Balti- 
more: Johns Hopkins Press. 1912. P]). IBl. $1, 

fJo7ms Hophins Universify S>driies in Historical and rolHital Science^ xxx-iii. 
To bo reviewed.] 

W(HH) (FREDEincK A.). The FinaiK'cs <d Woinout. New Y'ork : 
Columbia Ihiiversity Press, 1913. Pp. 117. Js. 

[Columbia University Sludics. lii-iii.] 


Bandeai: (Nicholas). Princijx's de la Science Morale et Politique 
sur le luxe et les loix somptuain^s, 17()7. Paris: (noithiuo*. 1912. 
Pp. xix4-32, 

[Reprinted in the Collection dcs Econoimstcs with an introduction and analytical 
table of contents by Professor Dubois, j 

F]LEwy(*K (Ernest \ax}. iai Baiupje nationale de Belgique: les 
Theories et les Fails, Brussels: lalirairie Falk fils. 1913. P]>. 
VI i -f 380 -f 412. 15 fr, 

[An elaborate history and account ol the BankV modo ut operations, partly 
designed to repel Socialist charges against the hank. To be reviewed.] 

Gjde (Charles) and List (Charles). Histoire des Doctriiu's 
ficonomiques depuis les PhysiocTates jusipi’a nos jours. Paris: 
Becueil Sirey. 1913. P]). wiii h 786. 12.50 ir. 

[“Deuxieme Edition, revue cl augment/e. ” The iirst edition of this valuable 
work was reviewed in the Economic Jouun.vl, vol. xix, p. 416. The new edition 
does not appear to differ very materially from the first. ] 

Moheaf (M,). ll<'('luuvln‘s oi Considerations sur la Popula- 
tion dc la France, 1778. Paris' (buithner. 1012. Pp. xxx-f303. 

[Reprinted in the Collection des Economistes with an introduction and analytical 
table of contents by Professor Gonnard.j 

Pierson (N. G.). Les Revenus de I’Etat. Translated into 
French from tht^ second Diitcli edition by Louis Suret. Paris: Giard 
k Briere. 1913. Pp. 386. 12 fr. 

[This is taken from the fourth book of Pierson’s Political Econermy^ which has 
recently appeared in an English translation.] 



[JUNE, 1913 

'* Skligman (E. K. a.). L’linpot sur le Reveiiu. Translated into 
French by William Oualid. Paris : Giard & Bri6re.. 1913. Pp. 
xii + 842. 15 fr. 

Wagnek (A.) and Deite (H.). Traile de la Science des Finances : 
Histoire de ITmpot depuis I’Antiquite jusqu’k nos jours. Vol. I.: 
Depuis I’antiquite jusqu’ii 1815. Translated into French by E. 
Botjche-ljcclercq. Vol. II. : Depuis 1815 jusqu’a 1910. Translated 
into French by Louis CouEinct. Paris : Giard & Bri^re. 1913. 
Pp. .x + 3274 371. 24 fr. 

[This oompletcH, in five volumes altogether, the French edition of Professor 
Wagner’s Finanzmissanschafi. Tho two volumes, referred to above, have been 
translated from a recent German edition, which had been brought up to date'by the 
author with the assistance of Dr. Deitc.] 


Adler (Karl). KnjiitulziiiB iind Prciebewegung. Munich: 
Duijoker k Huinblot. 1913. Pp. vii + 48. 1.20 marks. 

[Bohm-Bawerk, the “ Productivity ” Theory of interest, the relation between 
the value of the Vrodukte and the Produktivgiiter^ etc.] 

PicTiT (Wkuner). ToyiibtH' Hall und die Englische Settlemeut- 
Bewegung : ein Beitrag zur Goschichte dcr sozialen Bewegung in 
England. Tubingen: J. C. B. Mohr. 1913. Pj). xi4-217. 5 inorks. 

{Archiv fiir Sotialwisscnschaft und Sozialpolitik, ix. To be reviewed.] 

Sand (E. W.). Die Ursaclien der Teuerung. Munich: Duncker 
k Huinblot, 1913. Pp. vi-f-58. 1.50 marks. 


Battjstella (C.). 11 concetto di reddiio in tcxuiomia, in fiuanza 
ne] diritto finanziano. Rovigo : Tipografia Sociaie. 1913. 

Masci (G.j. II concetto e la definizione del reddito. Napoli; 
Pierro. 1913. 

Pallottino (JI.). 1 ])aeHi miovi nel loro procedere econoinico. 

Ancona : Puccini. 1913. 

Sack (A.). The Peasant Land Bank in Russia, 1888-1910. 
Moscow. 1911. Pp. xii + 607. 

[In Russian.] 

Samaddar (JooiNDRA Nath). Elements of Political Economy (in 

[With an introduction by Prof. B. N. Sen. Professor Samaddar’s book olaimi 
to be “ the first of its kind in the Bengali language.” It is primarily intended for 
Indian B.A. students. To be reviewed ] 

Waller (G. A.). The Problem of Social Economy. The Author: 
Yungaburra, North Queensland. 1913. Pp. 91. 

[Reprinted from the “ Tableland Examiner,” Atherton, North Queensland. 
This brochure, on the first principles of economic social organisation, not without 
reference, however, to recent Australian land legislation, shows considerable 
ability and power of economic reasoning.] 





In Past and Present Carlyle describes with great vigour and 
j:»Qvver the divine mission which the “Captains of Industry “ 
might fulfil in their sphere of work among the “disinherited” of 
the w^orld. In this special case his usual pessimistic tendencies 
take an optimistic turn. Carlyle the prophet, the believer in 
heroes, is sure of the coming of some great n^fonner, because lie 
trusts in man’s equity, truth, and mercy. The picture h,e draws 
of such a man bears strong likeness to tlie noblest Oerman 
practical social reformer of modern times. 

This great man w^as the late Ernst Abbe, for many years 
Professor in the University of Jena, a great scholar in natural 
science, astronomy, and physics, besides being a first-rate 
mathematician. But he w^as also the owner of the famous optical 
works in Jena, and founder of the “Karl Zeiss Institution,” an 
establishment wdiose principal object is to try to solve the most 
momentous of all problems — the social one. 

Ernst Abbe was born on the 23rd of January, 1810. As the 
son of a poor spinning overseer in a mill at Eisenach, he had seem 
the degenerating effect on his father and others of fourteen to 
sixteen Jjiours of daily toil accompanied by low wages, miserable 
surroundings, poor food, neglect of family life and education. He 
said himself, when Fortune was smiling on him and he had 
become the owner of a prosperous business, that he could not 
remember his father’s worn face and frame and at the same time 
look on the workmen with the eyes of a capitalist. The boy’s un- 
common intelligence interested his teachers, and means were 
found for him to attend the grammar school at Eisenach, prepara- 
tory to his being sent to the University. In Jena and Gottingen 

No. 91. — VOL. XXIIT. A A 



[sept. • 

he then studied philosophy, mathematics, and astronomy. After 
taking his degree in 1861, he became a master at the Physicalis- 
chen Vcrein in Frankfiirt-on-Main for two years, which post 
he exchanged for that of a University tutor (Privat Dozent) in 
Jena in 1863. He became Professor in 1870, and Director of the 
Observatory in 1875. Up to manhood his means of subsistence 
had been very scanty. Private lessons, some scholarships, the 
solution of prize questions, had helped him on during these years 
of study and teaching. The sternness of life fixed in him an 
inherited taste for a simple way of living ; luxury in any form was 
distasteful to him as an enervating foe to hardy manhood. 

The year 1806 was the turning point in Abbe’s career. Karl 
Zeiss, a mechanic in Jena, was at that time the University 
optician. He constructed microscopes in the old mechanical way, 
scientific principles being unknown to him. In 1866 he felt 
convinced, how^ever, that mathematical and physical science must 
come to his aid in order to bring his instruments to such perfec- 
tion as was then needed for scientific and practical purposes. He 
asked the young tutor to join his knowledge to Zeiss’s own experi- 
ence, and Ernst Abbe accepted the offer. The man of science 
now became a practical optician, and his superior knowledge and 
skill soqn gained for the microscopes of the firm the reputation of 
being the best in the world, a renown upheld to the present day. 
Scientific researches combined with practical construction had 
brought about this result, w'hich was completely achieved wiien, 
in 1879, with a third assistant, Bcbolt, a young doctor of 
chemistry, Abbe discovered a process for jierfecting the optical 
glasses of his instruments. Zeiss, Abbe, and Schott founded a 
technical laboratory for optical glasses, and this workshop took its 
due share in the work and its successful progress. 

In 1875 Karl Zeiss, the owmer of the optical wwks, asked his 
assistant to become his partner in the business, and Abbe 

Microscopes were not the only instruments to which this 
creator of (he w'ork of the optician as a science turned his atten- 
tion. The director of the observatory soon became the manufac- 
turer of the incomparable Zeiss telescopes. J^hotography and 
photographic j)r()jtic1ion also awakened his interest. The brilliant 
epidiascope , micro-photographic apjiaratus , improved cameras , 
the tele-objeclive were fruits of his researches in that sphere. 
Topographers, architects, engineers make use of Abbe’s spectro- 
meter, refractometer, stereoscope, stereo-comparator, and photo- 
theodolite. The material and construction of the instruments are 


of first-rate quality. No wonder that in spite of the high price 
which the instruments command, the firm has no need to fear 
competition. The instruments which serve for scientific experi- 
ments are not patented, lest the course of progress might be 
hindered. Abbe did not believe in the infallibility of his own 
brains, and gladly accepted scientific help from any quarter 

lu 1888 the founder of the works, Karl Zeiss, died. His son 
quitted the business in 1889 after having received his legal share. 
1’he Gei*nian professor thus became the sole proprietor, and his 
fortune would have been sufiicient to permit, him to enjoy tlui 
leisure which is commonly the accompaniment of w(ailth. 
Neither his own nor his family’s inclinations, however, lay tliafc 
way. Their viev.’ of life had renuuned ideal, showing no love for 
self-aggrandisement and self -absorption, and were permeahvl with 
a deep-felt responsibility towards all those in their 'employ, both 
officials and workmen, but especially the latter. Abbe’s altruistic 
sentiments took definite form as soon as the opportunity for their 
exercise presented itself. 

The professor, scientist, manufacturer now bccaino a modern 
social Reformer of the most radical kind : not a theorist or 
visionary like Carlyle, but a man of action, tlie exccifi^^r of his 
owm ideas. They had long been pondered over. On the 1st July, 
1891, the fruit was ready for plucking. Ernst Abbe, the sole 
proprietor of the optical works, divested himself of his ownershij) 
by incorporating them in the so-called “Karl Zeiss Institution,’* 
bestowing on it his fortune of more than 11110,000 to carry out the 
social reforms he had in view. He himself became one of the 
managing officials of his institution, a servant where he once had 
been master, submitting beuceforth to the statutes as any other 
ordinary employee did. The Optical Works was now the. legal 
ownei, controlled by its own statutes. It is well w^orth while 
taking a look into tliis document of perfect jurisprudence. 

The aim was fourfold : Firstly, cultivation and continuation of 
the various branches of industry carried on in the establishment, 
consolidation of its pecuniary interests as a means of sustenance 
for the several thousand persons employed in it and the making 
it a useful instrument in the service of scientific and practical 
pursuits. Secondly, the fulfilment of more comprehensive social 
duties towards officials and workmen than a singk*. owner could 
guarantee for the future when the works would be under his 
control no longer. Thirdly, arrangements for opening up oppor- 
tunities for a b^ter education pf the working classes, not only of 

A A 


khis establishment, but also of the town and its environs. And 
last, not least, a liberal subscription to the University funds, 
especially on behalf of natural science. Abbe, the man of humble 
parentage, paid the debt he owed to science more than a thousand- 
fold. Since J891, above ;£200,000 has been given to the Univer- 
sity of Jena. New chairs have been founded for several branches 
of natural science, salaries regulated, and many buildings erected 
for scientific research. The new University buildings could 
scarcely Imve been built without the ample assistance of the funds 
set aside for this purpose. Abbe never forgot, and said so openly, 
that ‘the success of his methods was due to the combination of 
stuerice and practic'c scuence being the primary factor. 

The form of government of this small community is that of a 
co-operativt‘. society, witlj a well-educated and intelligent board of 
iiiaiiagers. Al)bc neveu’ thought of putting the executive power 
into the hajuls of the workmen. Though he was at heart a demo- 
('I'at, and his sympathy was keenest with the poor, he knew^ too 
well the high value of mental cultun*. His idealism had always 
been tempered by his conmioii sense and e.xperience. No Utopia 
fur hi]n, and thcTefore no such failure as Kuskin experienced with 
liis St. (leorge’s Guild. 

I^he actual control of the works is vested in the “Karl Zeiss 
institution." An olTuual of the (iovernment of Weimar is engaged 
in his leisure^ hours to superintend the carrying out of the various 
provisions of the statutes, but has no power given him orer the 
business o})erations of the works. Abbe never meant to make the 
firm a lucrative field for spe(*ulation and accuinulaticm of riches. 
Should it ever sink to that level the institution was to be dissolved, 
th(' works sold, and the sum total given to the University and 
other establishments for public wolfare. 

d'he administration of the internal affairs is attended to by a 
hoard of managers with partly scientific, partly technical, and 
partly commercial functions. It is really a republic on a small 
scale. The committee consists of the heads of the various depart- 
ments. One of its members is chosen as authorised manager of 
the whole works. The coniinittet* a])p()int the head engineers for 
every branch of mauufatdure cairiinj on in the establishment. 
They superintend tlie reserve funds and dispose of the surplus 
according to the statutes. Abbe himself became the first repre- 
sentative trustee. None of the members of the board get a share 
of the clear profits paid to every other official and workman at the 
end of the year. Abbe wanted them to be quite independent of 
personal motives when fixing the percentage, actuated solely by 


fairness and justice and guided^ty the actual state of the funds. 
Neithef are they allowed to increase their incomes by oilier 
private occupations. Their salary is never to exceed tlio tenfold 
income of an average worker of more than twenty-four years of 
age who hg,s been employed in the works for at least three years. 
The salaries of the officials are to depend on the average returns 
of the business. The fixed wvages of a workman twenty-four years 
of age amount to about £100 a year. Thus the salary of a manager 
does not exceed the tolal sum of £1,000. That seems little 
enough considering the great responsibility laid upon him. Abbe 
knew well enough, too, that sonie of these capable birsiness 
men might prefer a more lucrative post, but the materialistic 
bent of such minds had no room in a progiamme which 
could only be carried out by men who were intellectually and 
morally of the aame cast as the founder. TI}) (o the present 
his confidence in the integt ily of human nai uro *has not been 

Every branch of the iiidusiry is n‘sp(rliv(‘ly superintended by 
a body of offiedals appointed by the ditvdors The bead of each 
brand I is one of the inem])ers of the managing board. 

So much for the iub'lledual headshi[) of the' firm. The com- 
plement to this uffieial organisation is the pinvisiou for the low(‘r 
officials and workmen, Idiis is the work of a real friend of the', 
people, a social act and an exhihitiem of politi(‘al (X‘onomy in its 
widest sense. Moreover, its chied value lies in the faed. that it was 
not given under any obligation to the* weirkmem as aii alms or as 
the outpouring of gemerosity and eharilahle' fed ing. It was the 
epitome of justice, the realisation of the rights of the inferior 
(dasses to what was due to th(‘m not only in tlu^ form of decent 
wages and regulation of working hours, hut also of op])ortunilieB 
for recreation and tlie cultivation of their minds, and of a. sufficient 
income in case of sickness, disablement, accident, and old age. In 
a word, real dcmoc*,racy was evolved. There should hv no obliga- 
tion on the jiart of the recipients, they took hut what rightly 
belonged to them, no more, no less. 

The relationship between einploy^*r and em])loyed was stricdJy 
legal. The moral obligation on the jiait of the worknuin con- 
sisted in doing his work to the be.vst of his ability, and in behaving 
himself decently to all connected vith him in the factory. Tnde- 
]jendence of thought and action in religious, social, and political 
matters was fully guaranteed, and tolerance exercised in its widest 
sense. Compulsory absence from work on account of public 
duties is not followed by a suspension of payment. Party 




interests, the formation of clubs, unions, Sic., the competence and 
election of the board of labourers, are subject to no restriction or 
interference whatever. 

(Tovernrnent is not allowed to contribute to the pensions or to 
tue sick and old age insurance funds, neither do the officials and 
workmen. This duty devolves solely on the works, which have 
the benefit of the entire mental and bodily exertions of the 
workers; hence the provisions made in case of disablement, sick- 
ness, and old age l)iit the returns for what was spent on their 
behalf. To do full justice to this original scheme of Abbe’s, we 
mush look into tlK’s details of the legislation of this little 
comiiiunit y. 

ddu' r.)|)id a fid splendid development of industry and com- 
merce, also of the hrantdi Ahhe superintended, is based on a 
pro}>erly onfamycd dinsio)} of labour. At the same time, Abbe 
realised that the' work \^ould hecome monotonous in course of 
time to the x^orknian. It is not so interesting nor so full of 
variety as that performed by the artisan of old. Still, it is im- 
possihU' to turn lau'k th<' wlu^el of timcu Tliend’ore the disadvan- 
tages and dravA hat‘,kf; of the systejn nnist be equalised by a 
(vjinpensaf ion given to those who suffer from its evil consequences. 
'\t)bt' tried to accouijilish this by raising the tone of the workman’s 
private lib* and improving its moral and intidlectual conditions. 

When he was asked what had induced him to take this step, 
his answer was characteristic : “T said to myself vdien I beeame 
the sole ()\\uier of the business with several thousand people 
dependent on me, that it was my duty to bring about such condi- 
tions in the work and life of my fellow-workmen as would also 
permit me, without hurting my pride, to be a simple artisan in 
these workrooms.” 

1lie wages art' either at a fixed rate or according to piece- 
work. ddie legal minimum wage can never be reclueed, only 
raist'd. .No (onimercial crisis can lower it. The reserve funds 
are to Ix' draw ji on largely in times of commercial crisis. Losses 
aiid damages are not to be laid on shoulders feeble enough even 
in good times. Wagt's paid for piece work generally amount to 
uiore than the legal minimum Ihit. should it occur that tlicy 
do not coint^ up to this standard, the legal minimiirn due to the 
worker is alrt'ady settled. In the course of the year the works 
are closi'd oji twelve days (Easter, Whitsuntide, and Christmas), 
hut wages are not susptuided, and every man has a claim to a 
foi'tnighCs holiday in a>ddition, his pay being continued for half 
the time. 



These wages receive an addition at the end of the year through 
the distribution of the profits, which on an average have been 
about eight per cent. No dividends are paid to the creditors who 
invested their money in the business. They reap their 4 per cent. , 
no more, no less. Those who bring in the harvest are benefited 
by it. Abbe is not the only manufacturer who grants a share of 
the clear profits to his workmen. Freese in Berlin, Dr. Schott 
in Jena, Godin in France do the same; but they bestow it as a 
personal favour, whereas it is Ihe legal duo of “the Zedssianer,” 
as this working staff is called. Carlyle’s question whether or not 
“the master may grant his workers permanent interest in his 
enterprise and theirs that it really may become a joint Enter- 
prise, ” was answered by a timid and hesitating on his 

part. He knew the difficulties, thong li he warmly desired such 
results. Abbe’s beaily “Yes” is tlie fulfilment of (Carlyle's faint 

The Scotch theorist and the German practical social reformer 
were of one mind as to the basis on which all organisation a.nd 
its success are founded. If. is the j>rinciple of forming permanent 
contracts with the workmen instead of temporary ones. An 
official or workman once engaged and tried for six months cannot 
be dismissed after this time by the firm unless heavy moral 
charges are brought against him. If it does happen, ^tl.e man 
throwm out of work can take legal proceedings against the firm, 
and it is for the arbitration courts for trade disputes to decide 
whether the works shall jmy him compensation. The sixth part 
of the salary or wages paid to him since his entrance into the firm 
are his due. We see the demands of the Socialists for an Insur- 
ance Act for those thrown out of employment arc here acceded to 
voluntarily. The practice of so many masters of taking on 
labourers when orders press, and unscru])ulously dismissing them 
when no longer needed, cannot be carried on in this establish- 
ment. The indemnification in case of dismissal is to be paid out 
of the reserve funds. Thus the victim is enabled to look out for 
other employment without enduring misery after his discharge. 

Another way was found for alleviating lh(i lot of the working 
classes by diminishing the working hours. When Abbe first 
entered tihe business in 1875 twelve hours were the rule, reduced 
after a time to nine. When he heard that the Knglish Govern- 
ment had introduced eight, hours’ daily work in the Woolwich 
docks without lessening tfie pay, that, moreover, neither the 
quantity nor the quality of the work bad suffered from this deduc- 
tion, he gladly adopted this measure in 1900, after having tried 




the experiment in his works for a year on workers who were paid 
by piece work. The labourer being fresher both mentally and 
physically, the results of the experiment were even better than he 
had hoped for. Eight hours each for sleep, w^ork, and relaxation 
have done their best to make the Zeissianer the so-called 
aristocrat of the working class. 

For several years a half holiday was given to all employed by 
the firm on the 1st of May. It was considered to be a concession 
made to the many Socialists among Abbe’s workmen. He really 
did it in memory of the 1st of May, 1848, in England, when 
that Bill was passed which forbade women and children to work 
longer than ten hours a day in cotton mills, the first step to the 
“Hours of Ijahour Bill ” that followed for botli sexes. In politics 
Abbe favoured fri'c trade ; l)ut man’s h(‘alth had to 1)0 protected 
by legislative enactments. 

The thirtl link in the chain of his organisations dealt with 
insurance for old age, disablement, and death. Neither the 
State, the officials, nor workmen are allowed to c(mtril)ute to the 
reserve funds for these purposes. The business absorbs the 
strength of the employees who grow old in its service, and it is 
but just thai. the paying l>ack of the debt shmdd fall to the share 
of the firm which has reaped the benefit. State and miinici[)al 
officials pay no extra premium, why then should those do so who 
are generally worse ofT than they? An additional safeguard is 
the compensation paid in case of arbitrary dismissr.!, Toi' Abl)(‘ 
called an insurance without this support “a knife withf.ut an 
edge.” Seven to nine per cent, of all the salaries and w^nges ])aid 
during the year, therefore, go to the reserve funds to supply 
present and futun^ needs. 

Every official a.nd workma?! who entered the husiness hefuc^ 
his fortieth year, and who has been einj)loyed for five years, is 
entitled to a pension in case of disahlement. Should death intc^r- 
vene part of it is passed on to liis family. The sum, if withheld, is 
recovenible by law. A man is entitled to such a pension from his 
twentieth year. Abbe caused the pension to be rc^gulated accord- 
ing to the fixed salary or wages paid. After fifteen years of 
service its rate ainounts to 50 ])er cent., increasing yearly by 
1 per cent, up to 75 per cent, after forty years of work, the 
same as is granted by the State and municipalities to their 
officials. The })ension for old age is based on the same percentage, 
and is granted to anyone who has betn employed in the business 
for at least thirty years. At the age of sixty-five everyone is 
entitled to it. In case of a man’s death, his widow’s annuity for 



herself alone consists of two-fifths, with one child of three-fifths, 
with more than one of four-fifths of the sum which the husband 
would have got himself. 

The organisation of the workmen’s sick funds runs on 
similarly just and generous lines, although a premium has to be 
paid by the insur(‘d too. During the illness of the head of a 
family or one of its members three-fourths of the fixed wages, but 
not exceeding five shillings a day, are paid so long as the illness 
lasts, even if it be for a year or more. The doctor’s fee, medicines, 
or, if need be, treatment in hospital, fall on the sick fund. 
Women after confinement receive a subsidy of three-fonrths of 
their husband’s wages for six wrecks. Th(' payment made in case 
of the death of a wurkman himself amourds to iwau’^y times the 
sum of his daily earnings, for tht; death of his wife it is two- 
thirds of that simj, and for a child a fixed amoimt of one pound. 

The jinuriium for Ihcse insurances is 1 per. cerd'. of the wages 
not exceeding five shillijigs a day. Of that sum the firm pays for 
a single man five-eighths, for a man with a family three-eighths. 
A bacludor suffers a weekly deduction fu'm his wages of per 
cent., a married man of 2^ per cent. Hie book-keeper is paid 
by the fian. The administration is in the hands of a committee 
composed of ^vorknien. Thv. firm only possesses the right of veto 
should a change', of premium, or of the statutes, or th« l"-caking 
up of the sick fund be jilaniied by the board of workmen. 

To avoid illness as much as possible the young w^orking men 
are periodically examined by doctors, and instmcdaou is given 
them in hygiene, all at the expense of the firm. The sanitary 
regulations in the factories are exemplary. Daths may be had 
gratuitously at any time of day. The half-hour’s work missed 
must be made up for in the course of the wc'.ck. Alcohol is not 
permitted during working hours. Milk, mineral waters, c'C'C., are 
furnished by the firm at cost price. 

There arc large grounds for football and other sports, whilst 
part of a wood in the neighbouring mount oins is reserved for a 
f)leasure ground. 

Abbe abstained from building house's Lor bis workmen. He 
did not approve of imposing restrictions upon tliem in jirivate 
life. But money is readily advanced by the firm to the building 
society of the town, and hundreids of /eissianer have their own 
snug cottages and pretty gardens. 

The workmen’s interests are looked after by a board of 
labourers founded by the master in 1896. Its members, above 
one hundred in number, are elected by ballot of all the w^orkmen 




above eighteen years of ago. Seven of them chosen from among 
its members form the officers. They liave the right of appealing 
to the head commitlee of directors in all internal affairs of the 
business relating to their welfare, and although the final decision 
lies with ttu^ hoard of managers, freedom of spec'ch is permitted. 
Abbe said himself that- much good liad come from the joint work 
of both corporations, and the statutes leave the way open to 
further reforui and improvement. Standing still was not on the 
]irogramme of this man of modern natural science. He believed 
in evolution in the widest .sense of the term. Ruskin’s 
rnodifcvalism sapped IIk* life-ldood of the Rt. George’s Guild ; 
Abbe’s idealism was rooted in the [^resent state of things, making 
allowaaice for future' expansions. 

The disinterostt'dness of the donor e'annot be questioned. He 
rejected vehemently all e'nde'avours to bestow worldly honours 
upon him. He never looked upon his donations as gifts — they 
were ilif', natural obligations of a higlier human equity. He 
possessed a mind “graduated in Heaven's stern I^niversity,” 
ddiat is the M‘ci(*t of Ids suc(*ess. “Ttumanitv always pays best,” 
says th(' Seotcb poliiical ('('onomist. Rueb is the ease bei’e. The 
works a, re being extc'iidcd from year to year, an ('xternal jiroof 
of their tinanc'ial siu'cess, and the physical, moral, and mlelleetual 
c(»riditioij #of the woiisinan bears evidi'nci' of bis improvement, 
wiibout. meiilioning Ids Ixdb'H'd circumslaiu'^'s ])ecuniarjly. 

ddie. portrait of this man of geidiis would remain imperfect 
without some mention of the institutions founded fiy him for 
shedding fulU'r light, in the intellectual world. Tlie subviudion for 
the University of Jena has already been alluded to. tt is so 
considerable that the vox popnii has deelarc'-d Ablx' the fifth and 
greatest supporter of it, the others being tlu^ rrincipalities of 
Raxe-Weiinar, Mcdningen, Kohurg-Gotlia, and Altenhurg. Jena 
can boast of a llnivcrsitv eijiuil to the best in (lermany. It has, 
moreover, the reputation of being the stronghold of the utmost 
lilx'rty in si'i(*ntitic research and instruc.lion, a ])rivilege for which 
Ai)l)c sti])ulaled, should the subvention be continued. Rcience 
siibservi(*nt to labour, lids eombination was llu' banner he carried 
in forming his social ideas. 

Intc'llecJual culture is not- to he gained only at the Uidversity 
in J('na. Ofqioriimities fur mental inijirovemeiit are offered to 
everyone by the most conspicuous of Abbe’s gifts - the “i^^nple’s 
Hall as he termed it. The spl(>.ndid renaissance building 
contiains reaiiing rooms with more than a hundred newspapers, 
German arid foreign, of the most diverse iiolitical tendencies; 
more than three hundred magazines, paiuphlets, and encyclQ- 


paedias in every branch of science and ari, readinpf rooms for 
adults being also provided. A vvell-stockod cinMilafing free library 
of more than thirty thousand volunu's, both in literature' and 
science, is at the disposal of everyone. And the fee? tjuiei 
orderly conduct so as not <o disturb other i*(nidcrs- d'oi* the 
use of the library one’s signature with any further security. 
So far this ap])eal to man’s honesty and self-n'-sponsihiliiy lias 
proved the best policy. Another wing of the f)iiilding contains 
class-rooms for a commercial school, several lecdire-roorns, as 
well as apartments reserved for exhihilions of art. The most 
beautiful of all is the large music hall capable of holding more 
than two thousand people. (Massieal innsK', well performed by 
choir, orchestra, and first-class soloisis edify both mirul and 
soul. This music hall also serves for leeliuos delivered to a larger 
audience than th^- o' her rooms liold I 'nivea-sit y vac'ation courses, 
political na'^'tings. Ac., take, plare here. • • 

Buch is Abbe’s last will and testament. he(|ueatlied 

philanthrupY allied to truth aaid jnstiee, to his own and fnlure 
generations, after having given palpahh' proof of lU. henolieial 
influence on the working classes durmg llu' many V('ars of his 
arduous labour in Jejia. 

Abbe had died in 1905. (In Ihe 5jh oi Ih'hriMrv, 101). the 
four princely supporters of JoTia I'niversity dedieaUal a bust 
to his memory. It was placed in the college hall amongst 
those of princes who liad at one time or anothc'i' been (‘on needed 
with the Alma Mater. His wide circle of friends and admirers 
paid their debt of gratitude on the 30th of tfiily, 1011. OOie 
monument erected in front of his owm small hous(', the w^oi’ks 
and the People’s Hall is a little toinpU'. It eiu, loses the marble 
bust chiselled by the great (ierman sculfitor Klingt'r. Allegoric, 
reliefs at the base allude to Ahluds scientific and tecdmical 
significance. Four reliefs in bronze by ]\h'unj('r oji tlu' four sides 
of the temple illustrate “labour,” thus di'picling tlu' whole (airei^ 
of the hero. 

But gratitude to Abbe can scarce he sliown in visible, form. It 
corresponds with his own idea of the mat(<*i’ -to make, free arul 
profitable use of all the means offered Ihrough his institution in 
order to acquire a better mode of living, instruclion, literary and entertainment, liigber enliure -to gid. nearer to man- 
kind’s real destiny. Emerson’s words, “Only that good profits 
which we can taste with affi doors ofx'ii and which si'.rves all iru'n,” 
expresses a gospel which was nut only preached hut lived by 
Ernst Abbe. 1. (iLATziia 



When such a MTiier as Mr. Acworth, a distiDguished authority 
on railways, who is liimself unfavourable to their purchase by the 
State, declares nationalisation inevitable, it is time to discuss the 
probalde consequences of such a change. It would involve the 
largest financial transaction ever carried out ; theory should throw 
some little light on the future of the thousand millions sterling 
involved, and even faint illumination is worth seeking in such 
a case. 

The transaction would consist essentially in excJianging 
Government stock for the existing lailway debentures and stock. 
The ordinary shareholders would have to be bought out com- 
pletely, f6r they could not be left with any share in the business 
unless they shared the control to some extent. Hence there would 
be no reason for the issue of more than one kind of seemity .n 
exchange for debentures, preference, and ordinary stock. Th(‘. 
first question is as to the amount. 

Dchcnturcs . — The security of British railway d(‘bontures can 
hardly be improved even by the guarantee of the British Govern- 
ment, so th(^ Government could Jiot do less than guarantee to 
the holders their present income. The sajne may be said, prac- 
tically, of the “guaranteed” stocks. The nominal total of 
debenture and guaranteed stocks is about T*170,000,()00 : there is 
a great quantity at 21 and 3 per cent, which is below^ par, and 
only a little at high rates, quoted above par. Hence the market 
value is only about .LI 00 ,000 ,000, and the yield about 3*85 per 
cent,, or £15,400,000 a year. This the Government would have 
to take over. 

'The prefcrcuct’ stoeJis of the leading railways are nearly as 
good as the debentures, e.g., L. and N.W. yields 3*88 per cent., 
G.W. 3*97 per cent., G.N. and Midland 4’00 per cent. The 
nominal total is given as £350,000,000, the market value is a 
little under £300,000,000. It is possible that the owners might 



consent to a slight reduction of income in exchange for a Govern- 
ment guarantee that would increase slightly the market value of 
their stock. We may suppose the interest charge of about 
ill, 600, 000 reduced to, say, £11,000,000 : though it is doubtful 
whether the owners would think it a good exchange. 

As to the ordinary shares, their value is so variable that it 
would probably be better to deal with the companies rather than 
the shareholders, and allot each company a certain amount of 
British Government railway stock, and leave the company to 
distribute this among its shareholders. The amount of stock 
might be based uj)on the average profits for a few years past ; 
thus, in 1910 the balance after paying debenture and preference 
interest sufficed to pay 3' 18 per cent, on a nominal capital of 
£492,000,000 or £17 100,000. At how many years’ purchase 
should this be capitdiised? The most important ordinary stocks 
yield, at prebent, round about 5 per cent., which is equivalent to 
twenty years’ purchase , but this does not include shares in com- 
panies which are gradually working up to a better financial position, 
such as South Eastern deferred, Great Confral ordinary, &c. As 
the Government would be buying out the prospects as well as the 
immediate dividends of the shareholder, the price could hardly 
be put at less than twenty-two years, if the matter rested only on 
general principles of equity. • 

But there is an Act of Parliament (7 & 8 Viet., C‘h. 85, 181-1) 
which practically guarantees the railways twenty-five years’ pur-' 
chase of the “divisible profits estimated on the average of th(^ 
three next preceding years,’’ should the Government take over the 
lines constructed after the date of the Act. As there is no right 
of purchase of the earlier railways (which include iinjxirlant main 
lines) there can be no doubt but that the Government would have 
to give at least equally good terms for these. “Divisible profits ’’ 
would probably be taken to mean something more than the divi- 
dends actually paid, so that twenty-five times £17,100,000 or 
£127,500,000 is rather an under-estimate of the price. If we add 
6 per cent, we should perhaps get about the figure that an arbi- 
trator would adopt. 

Government Stock. - Jt is oul of the question to issue this at 
anything like the present price of (’onsols. The leading stocks 
give (April, 1913) the following yields : — 

Consols / at H-39 per cent. 

Local Loans. .. ... 3 at HS ... S'5H ,, 

Irish Land 2| at 73J . . . 3-72 „ 

The first is being redeemed steadily, the last is being issued, and 




there is accordingly a marked difference between them. If 
Government were to issue vast quantities of new stock it could 
not expect a better price than is paid for Irish land stock, 
especially ns it would have to be taken by railway debenture 
holders wlio are usc^d to getting 3f to 4 per cent, with perfect 
security, li tlie noininal rate of interest were chosen so that the 
])rice would be near jjar, and that is probably the wisest plan, it 
would have to be 3| pci* cent. Assuming this, for the moment, 
we require : — 

For ordinary sliaroR, say . JB446,(X)0,O00 at par. 

bbr prior chargor. X704,0(X),000 to yield the aimuitien stated. 

Total i*1, 150,000, 0(X) 

If a lower nominal rate of interest vv(in' ado])ted nothing would be 
gaintid ; and, moreover, the market would hardly accept any 
stock without* a g’liarantee against conversion for some time to 
come; the present debenture lioldei-s have, in many cases, a 
practical guarantee of this kind in the fact that their stock is 
mu(di below par, and in other cases it is irredeemable. We will 
assume (or the*, sake of argument that the new stock is made 
irredeemable for twenty years. 

Sinking Fund , — IN ext, the question of amortisation. What- 
ever muy'be the policy of the companies, it would not be wise on 
the part of the Government to assume that railways are going to 
retain their value for ever. Like other inventions, Ih^y are at 
the mercy of new^ inventions : the only permai^ent value lies in 
the fretdiuld — the wayleaves. As the land was acquired at an 
excessivt^ price, its value is only a small part of the present capital 
of ilie rail\va\.s; and even as wayleaves, railway ground has 
i’aet^ imkiiowu future competition from the roads, and the air. 
For Ihese ieasons it seems indispensable to provide a small 
sinking fund, say } p('r cent., which would redeem the stock in 
aboil I ejglily years. 

If the above (estimates may be taken as i-oughly correct, tiie 
Government would have to undertake the issue of at least 
.id ,150,001), (>00 ot stock bearing 3.^^ inteiest and ] sinking fund 
charge, and ineonveitible for twenty years. The total charge 
would b(‘ 1' lb,000,00t) a year. This is nearly eijual to the present 
net jirotits of the railways; as w^as, of course, to be expected. 
Kheturical exaggeration as to the savii^ig due to national credit is 
common : but on any careful study it is clear, that there could be 
no great immediate saving except by confiscation. It is to be 
noted that ‘‘watering” of capital by the companies in the past 


has no bearing on the calculation, which is based only on the 
actual yield of the railways at the present time. 

The fact that there would be no immediate surjdus of any 
magnitude WTmld be a very strong barrier against a policy of rale 
reduction or a policy of improved treatment of employees, and 
would therefore disappoint those most concerned to push nationali- 
sation. This, how'ever, leads to questions outside the scope of the 
present paper. 

What we are conceriu'd with is whether the purchase is likely 
to be a good one at the price. That depends partly, of course, on 
the changes in business -on the real ]>rogrcss of Britain, but also, 
in a more calculable way, on monetary changes, /.e., m the course 
of (i) prices, (ii) the rate of inter(*st. 

The level ot‘ does not duecTly aflect the transfer, but it 

would aflect the auK^rtisatiop, ii, as suggested here, the Govern- 
ment decided to carry that out. ^I’hus, BU])])os*ing 'prices were to 
go on rising i’oi a long tiiiis', the repayment of debt would be 
made in currency of less value than that of the present day, and 
the nation would acc'.ordingly be receiving a bonus on its pur- 
chase ; and, conversely, if prices should fall again. This effect, 
how^ever, even if it could be foreseen, would be unimportant, as 
the cost of repayment (by a i per cent, sinking fund) is only one- 
fifteenth of the cost of interest. * 

The financial success or failure of railway nationalisation 
depends chiefly on the course of the rate of interest, as this 
affects both earnings and exj)enses. But before discussing the 
way in which tliese are affected, one must recall briefly the causes 
of variation in rate of interest. The most important of tiiese are 
the degree of security offered by the borrower, the rise and tall of 
prices, and the demand for loans as compared wdth the supply of 
loanable capital.^ A rise in inliuest due to the last of tliese causes 
means that trade is really prosperous over the world generally, 
so that owners of capital are able to get a larger return for it : 
but if there were a rise due to insecurity it would be quite another 
thing ; while a rise due to depreciation of money (i.e., rise in 
prices) produces profits that are partly fictitious. 

Accordingly, if, after the railways had been bought, the market 
rate of interest were to rise on account of increased demand for 
capital, the general prosjierity that this indicate.d would be shared, 
to a greater or smaller extend, by tiie railways ; their jirofits would 
grow, whilst there need l5e no great increase in expenses, as 
materials would not be dearer, and though w^ages w^ould probably 

^ Lelileldt, Economic Journal, March, 1912. 




rise, they should not absorb all the increased receipts. In this 
case, then, the Government would have made a good bargain, like 
anyone who buys a business that afterwards improves. But if 
the rate of interest (due to general trade activity) fell, these 
results would be reversed. In the case of a company such 
fluctuations are borne by the propri